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Auto loan delinquencies in the fourth quarter hit their highest level since the financial crisis, a report out Thursday revealed.
About $23.27 billion in loans were 30 days or more late as of Dec. 31 — a whopping 14 percent increase from the year earlier and the most since the $23.46 billion in the third quarter of 2008, according to the New York Federal Reserve.
Delinquencies have moved up as the credit quality of the loans has deteriorated and the length of the auto loans has increased — sometimes to 84 months. [...] Delinquencies are the canary in the coal mine when it comes to losses for carmakers.
[...] The average monthly car payment in the fourth quarter rose above $500 for the first time, according to the credit-rating agency Experian.
(Score: 2) by c0lo on Saturday February 18 2017, @01:01PM
The silver-lining in this cloud... very low chances to see those car loans packed as derivatives.
If they'll do it, I don't think somebody would be that stupid to include such things in their portfolio.
But... what if I'm wrong?
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 1) by DoctorVoodoo on Saturday February 18 2017, @01:21PM
You kinda know you're wrong, don't you?
But it's OK. They have been "stress tested", so nothing to worry about.
Borrowing against a depreciating asset always makes sense. Yay.
(Score: 2) by bob_super on Saturday February 18 2017, @05:56PM
Dear Prez whose businesses need lots of loans, if you could get rid of that costly stress test thing, that'd be greeaaat!
(Score: 4, Informative) by butthurt on Saturday February 18 2017, @05:56PM
The earliest CDOs were constructed by Drexel Burnham Lambert – the home of former “junk bond king” Michael Milken – in 1987 by assembling portfolios of junk bonds issued by different companies. Securities firms subsequently launched CDOs for a number of other assets with predictable income streams, such as automobile loans, student loans, credit card receivables and even aircraft leases.
-- http://www.investopedia.com/terms/c/cdo.asp [investopedia.com]
What the market has failed to acknowledge, at least so far, is that there are huge pools of CDOs based on auto loans and credit cards.
If the economy continues to get worse, credit car[d] and car loan defaults are going to rise. As The Economist writes: "A consumer-credit slump, which looks increasingly likely, would clobber securities backed by credit-card and car loans, which are also pooled in CDOs."
-- http://247wallst.com/economy/2007/12/20/auto-loan-and-c/ [247wallst.com]
"ABS" is a short form for "asset-backed security."
If you frequent these pages, you may remember Skopos Financial, the subprime auto lender that’s been busy packaging all manner of questionable auto loans and offloading credit risk to investors via some of what can only be described as the most noxious looking ABS deals in the history of securitization.
[...]
Well, don't look now, but Skopos is at it again, and this time, 14% of the loans "backing" a $154 million ABS deal were made to borrowers with no credit score.
-- -- http://www.zerohedge.com/news/2015-11-03/subprime-auto-goes-full-retard-lender-sells-154-million-abs-deal-backed-loans-borrow [zerohedge.com]