While the unemployment rate sits at its lowest level in decades, cracks are beginning to form in the subprime auto loan market.
According to Moody’s, some 9.3% of auto loans extended to people with low credit scores are at least 30 days late, the highest since 2010, the WSJ reports.
“The households that were on the financial ledge to begin with might have been tipped to the point where it’s hard to keep up on the car loan and everything else, and people have to make some very hard decisions,” said Pamela Foohey, a professor at Cardozo School of Law who studies consumer law.
The bulk of the auto-loan delinquencies are among borrowers with credit scores below 660 – particularly (as one would expect) those with ‘bottom of the barrel’ credit (who probably shouldn’t have been able to obtain an auto loan in the first place).
And as the Journal notes, “If job losses increase, many more consumers might find themselves unable to keep up with the record amounts of debt they took out in recent years.”
One such borrower, Chris Woodward of Cedar Falls, Iowa, lost his job in August – his second layoff in eight months. Shortly thereafter, he fell behind on payments for his 2011 Ford Flex. He also fell behind on rent, and maxed out his credit card.
Autos Cost TOO much in this country !!!! Prices of what Houses used to cost & Not Worth Half of it !!!!
These loans will ruin & bankrupt many !!!
Too Much Electronics !!! Go back to Basics of the 70’s MECHANICAL !!!!
Mechanical is BETTER & they Last Longer > that’s why they changed over to ELECTRICAL !!!!!!
we are not building spaceships this is not the jet-sons !!!! Every Car & Truck & SUV NOT WORTH Half what
they cost !!!! PERIOD
The Road vehicles are approaching the Prices of AIRCRAFT !!!!!!
May as well buy a CESSNA !!!!!
For the young kids growing up today WHAT is the price of a HOUSE or CAR going to be ??? $ 1 Million ????
Better get a GOOD JOB or Business !!!!
Those are all people who shouldn’t have borrowed for a car in the first place. There’s reasons why they have low credit ratings, and even they themselves know that. Not to mention that because of their low credit ratings they have to pay sky high interest which makes their situation even worse.
Car Insurance is also TOOOOO High !!!!! & it should be Illegal to charge by Your Credit Score !!!!!
GLAD mine is PAID FOR > that’s the BEST kind !!!!! & I can do My own work too > No Shop bills !!!!!!
Never buy another NEW vehicle !!! Never buy another New House !!!! Will be the MUST in America !!!!!
Well, I suppose that means we will be seeing many repo tow trucks latching onto Escalades, Nissan Maximas, Infinitis and Mercedes from the yards of shacks.
Do you people know that car payments are OFTEN $700-800 A MONTH!!??
Who can keep up with that?
Even cheap, basic, no frills new cars are $25,000.
Want four tires and heat?? Another $4000.
Revolution, people.
This WILL NOT STOP until they have CRUSHED everyone. Think you are immune from it??
Nope.
You are NEXT.