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Hey /biz/, I work for a major auto financing company and I'm starting to notice some things that have made me question the stability of the entire business. Without going into too much detail, I've noticed that incidences of fraud are occurring at a higher rate, and this is just the fraud that we are able to catch. Most of this fraud is dealer's cutting corners so to speak, but the result is people getting loans that probably shouldn't get them.
Our delinquencies(mainly in subprime), as well as industry wide delinquencies are growing. Due to pressure from government and consumer advocacy groups we now offer longer term loans, which when considering the collateral that we are financing seems a bit ridiculous in my opinion. 7 Year loans are becoming a new normal.
The thing is, I really only understand the auto industry side of things. Where I start to lose understanding is on the ABS's that I know our loans get bundled into.
It seems clear to me that a slowdown in the industry is coming after years of substantial growth, but what's the bigger picture here?
tl;dr How do rising Auto Delinquencies affect auto loan backed ABS's and what effect does this have on the economy overall?
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>>1570384
You can't get a subprime loan on a new car can you? and who gives a shit if it gets repo'd these people want to sell it 10 times over, from leasing to purchasing
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>>1571048
You're focusing too much on the collateral. Subprime loans do occur on new vehicles it's just not as common. Repossession is still a problem. Unless the unit is repossessed late in the loan, we normally suffer a deficiency even after selling at auction. If there is a deficiency after selling at auction you can forget about ever seeing that money since most of the time people don't pay after losing her collateral.
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>>1571062
I work on the manufacturing side, I don't see a problem. I am not worried about a bunch of used cars getting repo'd. I'm more concerned about uber and electric vehicles and that sort of shit. This is my opinion though, I don't know much about the financing side.
As long as we're still making new vehicles I don't care.
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The minimum loan they would give me was 4 years. I wanted 2 years. I mean, whatever, the interest rate was like 1%. Basically nothing.
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The arse will fall out of it soon enough.
I see it a lot in the UK. Young people in their twenties earning the equivalent of £20-30k per year, driving a £20K car on finance whilst renting.
Rent increases faster than wages so the slither of pie left for everything else is decreasing each year. Student debt, inflation, etc does not reassure me of a bright future.
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