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BeckyDem

(8,361 posts)
Wed Feb 12, 2020, 12:06 PM Feb 2020

Subprime Auto Loans Explode, "Serious Delinquencies" Spike to Record. But There's No Jobs Crisis,

Subprime Auto Loans Explode, “Serious Delinquencies” Spike to Record. But There’s No Jobs Crisis, These Are the Good Times

Posted on February 12, 2020 by Yves Smith

Yves here. Subprime auto loans provide more evidence that this supposedly solid “recovery” has cracks in its foundations. This is the sort of “Ponzi finance” behavior that Minsky accurately depicted as leading to eventual ruin.

By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street

Auto loan and lease balances have surged to a new record of $1.33 trillion. Delinquencies of auto loans to borrowers with prime credit rates hover near historic lows. But subprime loans (borrowers with a credit score below 620) are exploding at a breath-taking rate, and they’re driving up the overall delinquency rates to Financial Crisis levels. Yet, these are the good times, and there is no employment crisis where millions of people have lost their jobs.

All combined, prime and subprime auto-loan delinquencies that are 90 days or more past due – “serious” delinquencies – in the fourth quarter 2019, surged by 15.5% from a year ago to a breath-taking historic high of $66 billion, according to data from the New York Fed released today:

https://www.nakedcapitalism.com/2020/02/subprime-auto-loans-explode-serious-delinquencies-spike-to-record-but-theres-no-jobs-crisis-these-are-the-good-times.html

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Subprime Auto Loans Explode, "Serious Delinquencies" Spike to Record. But There's No Jobs Crisis, (Original Post) BeckyDem Feb 2020 OP
Canary in the coalmine cherryinpa Feb 2020 #1
Exactly. That is what Obama inherited, a huge mess. BeckyDem Feb 2020 #2
Crush the labor unions so wages become stagnant. CrispyQ Feb 2020 #3
You got it. +1 BeckyDem Feb 2020 #5
The lenders say... neeksgeek Feb 2020 #4
My friend and I buy cars from safeinOhio Feb 2020 #6
Good for you! I'm sure those you're helping appreciate it. BeckyDem Feb 2020 #8
yup, the economy is doing well handmade34 Feb 2020 #7
In every economic cycle Wellstone ruled Feb 2020 #9
The debt scam, yes indeed. BeckyDem Feb 2020 #10
During the last Rethug Wellstone ruled Feb 2020 #11
I find the anxiety of young people to be justified. BeckyDem Feb 2020 #12
What kind of rates are people paying? Mosby Feb 2020 #13
Depends. The CFPB defines five levels of credit scores for people who take out an auto loan. BeckyDem Feb 2020 #14
 

cherryinpa

(301 posts)
1. Canary in the coalmine
Wed Feb 12, 2020, 12:11 PM
Feb 2020

Canary in the coalmine, Trumps so called economic miracle is built on a house of cards.

Personally in my line of business I'm seeing lots of pull back simply because of the s.179/bonus depreciation taken in 2018.

Trump has pulled forward huge demand and now we pay the price.

Sadly whoever takes over is gonna need to clean up a mess, as usual.

CrispyQ

(36,225 posts)
3. Crush the labor unions so wages become stagnant.
Wed Feb 12, 2020, 12:31 PM
Feb 2020

Offer easy credit so people can maintain the same lifestyle even as prices go up and wages stay the same. Turn basic necessities like health care and education into a for-profit ventures and convert your citizens into consumers. Thirty years later, you have a nation of debt slaves, people too indebted to rise up against the plutocrats as they dismantle the government and pilfer the treasury.

The GOP plan is right on track and they are going to pull out all the stops this year. This will be the ugliest election year ever.

neeksgeek

(1,214 posts)
4. The lenders say...
Wed Feb 12, 2020, 12:31 PM
Feb 2020

“Of course there’s no jobs crisis. These delinquent borrowers are just irresponsible with their money!”

safeinOhio

(32,527 posts)
6. My friend and I buy cars from
Wed Feb 12, 2020, 12:50 PM
Feb 2020

the dealer only auctions. More and more 10 and 12 year old cars with no damage are coming up. Donated and bank repossessed along with insurance damaged ones. We can usually get some nice ones for $300 to $500 plus fees. We sell them very cheap and they go fast as lots of people are looking $1,000 or less good running cars. We go thru them to make sure they will run good and are safe. If not they become parts cars for us. For those without the cash we can sell them on time with a weekly payment they can afford and hold them for them until the last payment. We don't get rich, might do one or two a month. Retired, we have fun doing it.

handmade34

(22,755 posts)
7. yup, the economy is doing well
Wed Feb 12, 2020, 01:45 PM
Feb 2020

unless you are a working class person

the economy runs on the back of all of us and we will pay the price

 

Wellstone ruled

(34,661 posts)
9. In every economic cycle
Wed Feb 12, 2020, 02:13 PM
Feb 2020

when Cheap Money starts to flow,we usually have this issue pop up. Now with the Digital Media running the show,what does one expect. Look around and notice the Media Ads.

People like new shinny objects,and the media helps run the debt scam. Again,these Loans are bundled and sold with some being purchased by the Fed Reserve via the Repo Window.

 

Wellstone ruled

(34,661 posts)
11. During the last Rethug
Wed Feb 12, 2020, 06:11 PM
Feb 2020

led Bank Scam,did Mortgage Loans. We are seeing the same crap happening in real time. Watching the Bloomberg this AM,at least one Refly Ad per Have hour. Like 2006,same crap just 14 years later.

Now with the likely hood of zero Student Loan Cancels,oh Boy,hear we go.

BeckyDem

(8,361 posts)
12. I find the anxiety of young people to be justified.
Wed Feb 12, 2020, 06:47 PM
Feb 2020

Its like we are on this crazy carousel called, The GOP Scam Ride. Free tickets!

BeckyDem

(8,361 posts)
14. Depends. The CFPB defines five levels of credit scores for people who take out an auto loan.
Thu Feb 13, 2020, 03:22 PM
Feb 2020

Deep subprime (credit scores below 580)
Subprime (credit scores of 580 to 619)
Near prime (credit scores of 620 to 659)
Prime (credit scores of 660 to 719)
Super prime (credit scores of 720 or higher)

Subprime auto loans are sometimes even extended to people who have no credit scores at all.

https://www.creditkarma.com/auto/i/what-are-subprime-auto-loans/
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