Mar 26 2017

Subprime auto loans face mounting problems: With $1.1 trillion in loans outstanding we all know bad deals are made in good times.

Exuberance breeds bad decisions as inhibitions and due diligence get tossed out the window like dirty water.  This is exactly what is unfolding in the rampaging auto market.  The latest data from Fitch Auto ABS Indices shows that 60+ day delinquencies for subprime loans are now at 5 percent of all outstanding balances.  This is […]

Dec 2 2015

Unable to afford homes, Americans dive into subprime auto debt to purchase cars: Auto debt getting riskier with extended terms and chasing borrowers with lower credit scores.

The word “subprime” was synonymous with the toxic loans that were made during the credit bubble.  Some tend to think that those days are long gone but we simply have shifted the form in which toxic debt is filtered into the system.  Instead of making no-doc no-income loans on houses, we are now offering no-income […]

Sep 16 2015

How subprime loans keep the bubble going: Subprime auto loans continue to grow as credit worthy customers drop out of the market.

Low interest rates create an environment that encourages debt based spending.  In regards to monetary policy, this is how you grease the wheels to get the economic engine spinning.  As part of your financial arsenal this can be used in moderation but the Fed has been using maximum credit leverage since the economy imploded and […]

May 14 2015

Student and auto debt fuel credit bubble 2.0: Student loans carry the highest delinquency rate of all debt classes. Student and auto debt up $1.15 trillion in last decade.

A large portion of our recent recovery has come from debt fueled consumption.  The bailouts have been favorable to financial institutions but access to debt for American families has been in segments that are counterproductive to wealth accumulation.  There is no benefit in having access to cheap loans for purchasing a car, an “asset” that […]

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Mar 22 2015

Driving our way into financial poverty with six-year car loans: Once a minority, six-year or longer auto loans now make up one third of all new loans.

Taking on debt for buying a car is a risky proposition.  Taking on subprime debt for buying a car is simply a bad financial decision.  The subprime loan market is booming for auto loans.  Cars can last longer, require basic maintenance, and typically run better than older models.  That brings up challenges for the auto […]

Feb 20 2015

The revival of the American debt machine: auto loans, student debt, and credit card debt surge in latest report. Total non-housing debt now at $3.15 trillion.

Last week while going through mountains of credit cards offers, it felt as if we were in 2005 and 2006.  Even last year, the cold calls started and it seemed like the debt machine was back and alive.  This is helpful news for consumers given that half of Americans are living paycheck to paycheck.  Now […]


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