Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

April 26, 2020 | Wave of Repossessions Coming as Subprime Auto Buyers Miss Payments

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

 

Subprime car lenders report a sharp drop in auto loan payments.

In a sign of upcoming trouble, Subprime Car Buyers Miss Loan Payments.

Credit Acceptance Corp., the lender to car buyers with subprime credit scores, warned it’s seeing a sharp drop-off in payments as people shift their financial priorities to get through the coronavirus pandemic.

As unemployment soars, borrowers are putting off payments or “reallocating resources,” Credit Acceptance said in a regulatory filing Monday, explaining that it needs more time to publish a quarterly report. New lending is also slowing as dealerships across the U.S. are forced to shutter their lots, the company said.

Ally Financial Inc. said on Monday that about 25% of its auto-loan customers have taken advantage of its payment-deferral program.

Forbearance Masks Problems

The filing by Credit Acceptance shows some consumers already can’t keep up.

Meanwhile, loan applications have plunged as dealers have closed their lots.

Mish

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

April 26th, 2020

Posted In: Mish Talk

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.