What Bubble? Record $924 Billion In 65 Million Auto Loans: 31Percent Of All New Loans Are Subprime

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Earlier today, credit agency Equifax piggybacked on Experian’s auto loan data, and reported the following:

  • The total balance of auto loans outstanding in August is $924.2 billion, an all-time high and an increase of 10.8% from same time a year ago
  • The total number of auto loans outstanding stands at more than 65 million, a record high and an increase of more than 6% from the same time last year;
  • The total number of new loans originated through June is 12.5 million, an increase of 4.9% from same time a year ago
  • The total balance of new loans is $254.2 billion, an increase of 6.9% from same time a year ago and representing nearly half of total new non-mortgage credit originated
  • The total number of new loans originated year-to-date through June for subprime borrowers, defined as consumers with Equifax Risk Scores of 640 or lower, is 3.9 million, representing 31.2% of all auto loans originated this year.
  • Similarly, the total balance of newly originated subprime auto loans is $70.7 billion, an eight-year high and representing 27.8% of the total balance of new auto loans
  • Year-to-date in June, the average loan amount for borrowers with risk scores of 680 or lower are increasing the most, showing a 3% increase from the previous year. Loan sizes among borrowers with risk scores of 760 or higher show little change from the same time a year ago

At least we now know, definitively, what the reason for the US manufacturing surge in the late spring early summer was: a subprime credit-driven car buying binge.

(Read the rest of the story here…)

1 thought on “What Bubble? Record $924 Billion In 65 Million Auto Loans: 31Percent Of All New Loans Are Subprime”

  1. The automobile industry is basically a racket to take money on a monthly basis from all of us.
    The biggest mistake of my career was not learning how to fix my own vehicles. I can do basics fairly well. I know how to change an alternator or a starter on a car.
    When I look for a car, I want to know where they placed things. Is the starter under the manifold exhaust system? It is in Honda Accords of recent origin. It used to be readily available if you can call buried on one side of the engine beneath the air flow tubes and a number of wires.
    Then there are American Cars designed to fail with parts no one but a mechanic could get to.
    Or having to remove the engine to get to the plugs.
    Or a timing belt that requires you to disassemble the engine to the tune of at least $400-$1000.
    I went to a Nissan dealer because my truck was displaying lights on the dash. They wanted $90 an hour to work on it.
    The name “horse traders” comes to mind. The truck was on recall for the year before and the year after mine. But the year I have was not covered by the government recall. Wonder why?
    Then you have the parasitic EPA rules governing cars that make them too complicated for anyone to fix except a technician especially trained to do so.
    The entire car industry is dependent on people having to have a car to exist in this country.
    The public transportation system in much of the country is at best inconvenient and takes more than an hour to get from point a to point b. Like where you work for a living. That works out at about 2 hours of your time per day if you are lucky. If not, you could be left standing at a bus stop for hours in freezing cold weather. No one puts a bus stop in a warm building.
    Obama did his part. He put a high price on junkers with government subsidizing that removed a lot of them from the market place. That meant throwing a used engine into an old car to keep it going was out of the question because he pulled them from the market place and destroyed them.
    If they could be drove into the dealership they were eligible.
    Sit on any busy road in a local city between 3 and 6 p.m. You will see the investment of America in cars. One road had a timer and check on the road. Over 40,000 vehicles ran across that check point in a 24 nour period. The average cost of those vehicles is anyone’s guess. But I suggest for convenience sake we say $10,000 per vehicle. Though there are probably a whole lot of used cars out there for a lot less. 40,000 x 10K is a lot of money.
    That they are all engineered to be near junk in as little as 10 years time is astounding to me.
    Toyota and Honda were designed illegally abroad to be a reliable transport for many years. I say illegal because if any one of the big three colaborated here they would go to jail under the anti-trust laws that tied up our industry while letting them go ahead and do what they want and compete with our industry in the process.
    Near as I can tell, they cannot even have dinner together under our laws.
    So how come they get a free pass? It is because they do it under Japan’s laws instead of our own and originally there were fancy tarriffs to keep them out.
    If I had it to do over again, I would have taken every shop course I could get my hands on in high school. Especially anything to do with maintaining and keeping my vehicles repaired myself.

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