Santander Makes Unexpected Subprime Gains as Competitors Pullback

Santander Makes Unexpected Subprime Gains as Competitors Pullback

http://www.autofinancenews.net/santander-makes-unexpected-subprime-gains-as-competitors-pullback/

Your neighbour's shiny new SUV is about to crash the economy

PETER HITCHENS: Your neighbour's shiny new SUV is about to crash the economy

http://www.dailymail.co.uk/debate/article-4743244/PETER-HITCHENS-Car-finance.html

Discuss
www.housepricecrash.co.uk/forum/index.php?/topic/229784-boe-investigates-terrifying-rise-in-borrowing-to-fund-new-car-purchases/&page=24

Wells Fargo charged 570,000 customers for auto insurance they didn’t need

  Wells Fargo charged 570,000 customers for auto insurance they didn’t need

  https://www.washingtonpost.com/news/business/wp/2017/07/28/wells-fargo-charged-570000-customers-for-auto-insurance-they-didnt-need-potentially-forced-some-to-have-cars-repossessed/

Wells Fargo May Have Charged 500,000 Clients for Unwanted Insurance

  Wells Fargo May Have Charged 500,000 Clients for Unwanted Insurance 

fortune.com/2017/07/28/wells-fargo-loan-default-scandal/

Franchised dealers defend PCP car finance deals from media attacks

Franchised dealers defend PCP car finance deals from media attacks  

www.am-online.com/news/finance/2017/07/25/franchised-dealers-defend-pcp-car-finance-deals-from-media-attacks

Sub-prime auto bets pay off

Sub-prime auto bets pay off   https://www.investing.com/news/stock-market-news/wells-fargo-to-refund-$80-million-to-customers-hit-by-car-loan-insurance-511446

Sub-Prime Auto Loan Delinquencies Continue to Rise, but Experts Provide Divergent Views of Impact

 Sub-Prime Auto Loan Delinquencies Continue to Rise, but Experts Provide Divergent Views of Impact

https://www.natlawreview.com/article/sub-prime-auto-loan-delinquencies-continue-to-rise-experts-provide-divergent-views

Wells Fargo Announces Plan to Remediate Customers for Auto Insurance Coverage

  Wells Fargo Announces Plan to Remediate Customers for Auto Insurance Coverage

  www.businesswire.com/news/home/20170727006737/en/Wells-Fargo-Announces-Plan-Remediate-Customers-Auto

Are Subprime Car Loans Falling Off a Cliff?

Are Subprime Car Loans Falling Off a Cliff?    themarketmogul.com/subprime-car-loans/?hvid=1vcrQq

Most Ignore This Potentially Fatal Problem in the U.S. Economy

  Most Ignore This Potentially Fatal Problem in the U.S. Economy 

https://www.lombardiletter.com/most-ignore-this-potentially-fatal-problem-in-the-u-s-economy/14231/

Don't Cry for Subprime Auto-Debt Buyers

Don't Cry for Subprime Auto-Debt Buyers 

https://www.bloomberg.com/gadfly/articles/2017-07-25/auto-debt-buyers-find-immunity-from-subprime-distress

..And in an odd twist of logic, the ratings of these subprime securities backed by auto debt are steadily improving even as more American borrowers fail to meet their monthly obligations...

How Your Credit Score Affects Car Financing

  How Your Credit Score Affects Car Financing

www.consumerreports.org/car-financing/how-your-credit-score-impacts-car-financing/

LTVs Hit Record Low in Santander’s DRIVE Auto Securitization

LTVs Hit Record Low in Santander’s DRIVE Auto Securitization

www.autofinancenews.net/ltvs-hit-record-low-in-santanders-drive-auto-securitization/

Why Auto Loan Bubble Is Different than Housing Bubble

  Why Auto Loan Bubble Is Different than Housing Bubble

https://www.moneyshow.com/articles/tradingidea-46551/why-auto-loan-bubble-is-different-than-housing-bubble/

Bank of England warns of complacency over big rise in personal debt Banks, credit card companies and car loan providers told they face action against reckless lending

 Bank of England warns of complacency over big rise in personal debt Banks, credit card companies and car loan providers told they face action against reckless lending 

https://www.theguardian.com/business/2017/jul/24/bank-of-england-household-debt-bank-credit-card-car-loans

Auto Industry Benefits For Now From Subprime

  Auto Industry Benefits For Now From Subprime

Loanswww.npr.org/2017/07/24/538970928/auto-industry-benefits-for-now-from-subprime-loans

Millions Of People Think They'll Default On Loans In The Next 12 Months

Millions Of People Think They'll Default On Loans In The Next 12 Months

https://www.forbes.com/sites/eriksherman/2017/07/23/millions-of-people-think-theyll-default-on-loans/

German car industry faces being hit with big fines Tarnished auto sector on the line as groups confront accusations of cartel-like behaviour

German car industry faces being hit with big fines
Tarnished auto sector on the line as groups confront accusations of cartel-like behaviour 

https://www.ft.com/content/2351ae12-705d-11e7-93ff-99f383b09ff9

Ireland finally wakes up to hidden dangers of popular PCP car finance deals

Ireland finally wakes up to hidden dangers of popular PCP car finance deals 

www.independent.ie/business/personal-finance/charlie-weston-official-ireland-finally-wakes-up-to-hidden-dangers-of-popular-pcp-car-finance-deals-35957898.html

Warning about number of cars for sale with money owed on them

  Warning about number of cars for sale with money owed on them 

https://www.rte.ie/lifestyle/motors/2017/0724/892629-finance/

1946 Chevy pickup truck is world's oldest Prius hybrid. Really

1946 Chevy pickup truck is world's oldest Prius hybrid. Really 

www.greencarreports.com/news/1111690_1946-chevy-pickup-truck-is-worlds-oldest-prius-hybrid-really

EU investigating diesel collusion among Audi, BMW, Mercedes, Porsche, VW: report

EU investigating diesel collusion among Audi, BMW, Mercedes, Porsche, VW: report 

http://www.greencarreports.com/news/1111670_eu-investigating-diesel-collusion-among-audi-bmw-mercedes-porsche-vw-report

Different Market, Same Story: Subprime Auto Loan Defaults On The Rise

 Different Market, Same Story: Subprime Auto Loan Defaults On The Rise

https://www.benzinga.com/analyst-ratings/analyst-color/17/07/9784480/different-market-same-story-subprime-auto-loan-defaults-

Ireland.... Over half of new cars sold under finance deals

Ireland....

Over half of new cars sold under finance deals

www.irishexaminer.com/ireland/over-half-of-new-cars-sold-under-finance-deals-455183.html

Cheap money, lax lending standards – I’m getting deja vu here

 Cheap money, lax lending standards – I’m getting deja vu here

moneyweek.com/cheap-money-lax-lending-standards-financial-crisis/

The subprime car loan pile-up

Meanwhile, there’s another chunk of woeful debt building up in another sector. Apparently subprime car loans made in 2015 in the US could end up being the worst performing such debts ever, according to ratings agency Fitch.

Net losses on these bonds are expected to hit 15% – that’s higher even than bonds written in 2007. One problem is that lenders have been lending over a longer period of time, which means that by the tail-end of the loan period, there’s been a big drop off in the car’s “equity” value, potentially leaving the borrower owing a lot of money.

These loans have been parcelled up and sold on to investors, just as with the last subprime crisis (you know, that one with the mortgages that caused a minor kerfuffle in the economy a few years back). And just as with the last subprime crisis, demand from investors for stuff to invest in has seen lending standards plunge across the industry.

Notes Bloomberg: “Wall Street has rewarded lax lending standards that let people get loans without anyone verifying incomes or job histories.” And as a result, a lot of those loans are now going bad.

The biggest difference here is that the scale is not considered large enough to disrupt the entire financial system. And I’m sure that’s true. On their own, car loans are not going to bring the financial system to its knees.

What concerns me is that there’s such a dispersion of bad debt either bubbling up or just waiting to happen. How many dominoes need to tip over before a really important one spills?

As long as investors feel flush and are desperate to chase yield, the dancing can continue. But that’ll change. And I expect to see quite a few casualties when it does.

Auto Loan Debt Bubble Could Be The Next To Burst (CARZ)

https://etfdailynews.com/2017/07/19/auto-loan-debt-bubble-could-be-the-next-to-burst-carz/ 

A changed landscape in Canadian auto finance When captives retreated from market in 2008, banks filled void

A changed landscape in Canadian auto finance When captives retreated from market in 2008, banks filled void 

www.autonews.com/article/20170719/COPY01/307199999/a-changed-landscape-in-canadian-auto-finance

Sub-prime auto loans and the US property market

 Sub-prime auto loans and the US property market

https://www.propertyforum.com/property-in-the-us/sub-prime-auto-loans-us-property-market.html

CCPC study of PCP car finance in Ireland

CCPC study of PCP car finance

https://www.ccpc.ie/consumers/2017/07/17/ccpc-study-pcp-car-finance/

Subprime auto loans are defaulting at dangerous rates

Subprime auto loans are defaulting at dangerous rates

https://finance.yahoo.com/video/bumpy-road-ahead-auto-industry-181649147.html

As Lending Goes, So Goes the Auto Industry

As Lending Goes, So Goes the Auto Industry 

wardsauto.com/f-i/lending-goes-so-goes-auto-industry

Auto loan defaults soaring in US

Auto loan defaults soaring 

www.bendbulletin.com/business/5453494-151/auto-loan-defaults-soaring

Subprime Loans Defaulting At Record Rates - Will The Next Recession Be Triggered By The Auto Industry?

Subprime Loans Defaulting At Record Rates - Will The Next Recession Be Triggered By The Auto Industry? 

autospies.com/news/Subprime-Loans-Defaulting-At-Record-Rates-Will-The-Next-Recession-Be-Triggered-By-The-Auto-Industry-93580/

Competition watchdog to examine PCP car finance market

 Competition watchdog to examine PCP car finance market 

https://www.rte.ie/news/business/2017/0717/890778-ccpc-to-examine-pcp-car-finance-market/

Auto loan defaults are soaring

  Auto loan defaults are soaring 

www.mysanantonio.com/business/national/article/Auto-loan-defaults-are-soaring-11295066.php

Big Banks See Home, Car Loans Fall

Big Banks See Home, Car Loans Fall 

http://www.cutimes.com/2017/07/14/big-banks-see-home-car-loans-fall

Two of the nation’s largest banks on Friday reported slower volumes on home and auto loans in the second quarter as mortgage refinances continue to taper off and car lending standards tighten.

Subprime auto loan ABS performance worsens in May

Subprime auto loan ABS performance worsens in May 

http://www.autoremarketing.com/subprime/subprime-auto-loan-abs-performance-worsens-may

Regulator takes action to address risky lending practices - UK Finance Disputes and Regulatory Investigations

 Regulator takes action to address risky lending practices

UK Finance Disputes and Regulatory Investigations Blog

www.lexology.com/library/detail.aspx?g=50be3afd-1ca6-404c-bbd7-90babecff599

Equity release from houses being used to pay off car loans

Equity release from houses being used to pay off car loans 

https://www.ftadviser.com/Articles/2017/07/14/FTA-car-finance-IJ-O-140717

New U.S. Subprime Boom, Same Old Sins: Auto Defaults Are Soaring

 New U.S. Subprime Boom, Same Old Sins: Auto Defaults Are Soaring

https://www.bloomberg.com/news/articles/2017-07-17/new-u-s-subprime-boom-same-old-sins-auto-defaults-are-soaring

Drowning in debt is the new normal in Canada

Drowning in debt is the new normal in Canada  

http://www.news1130.com/2017/04/24/drowning-debt-new-normal-canada/

Here is just a sample of recent files that have crossed our desks: A staff accountant with multiple lines of credit, several maxed-out credit cards, a big mortgage, a significant home-equity line of credit (HELOC) and two leased luxury cars; a TTC driver with two mortgages and $100,000 in unsecured lines of credit; a teacher with eight payday loans and a senior financial analyst at a chartered bank with seven credit cards, all carrying high balances. I could go on and on. 

Those disturbing financial cases are no longer the extreme end of the spectrum that they were at one time. They are the “new normal” in our trustee practice. The real horror stories are far worse, albeit less frequent.

Subprime Auto Loans Up, Car Sales Down: Why This Could Be Good For Gold

Subprime Auto Loans Up, Car Sales Down: Why This Could Be Good For Gold

https://www.google.com/url?rct=j&sa=t&url=https://www.forbes.com/sites/oliviergarret/2017/07/13/subprime-auto-loans-up-car-sales-down-why-this-could-be-good-for-gold

Wells Fargo Remolding Auto Loans for More Centralised Risk Controls

  Wells Fargo Remolding Auto Loans for More Centralised Risk Controls 

www.news18.com/news/auto/wells-fargo-remolding-auto-loans-for-more-centralised-risk-controls-1460127.html

PCP car deals: should we be worried?

PCP car deals: should we be worried?

https://inews.co.uk/essentials/lifestyle/cars/car-features/pcp-car-deals-worried/

Buying a 172 car? With a personal contract plan? Read this . . . If a personal contract plan goes awry you could end up owing more than the car is worth

 Buying a 172 car? With a personal contract plan? Read this . . . If a personal contract plan goes awry you could end up owing more than the car is worth

https://www.irishtimes.com/business/personal-finance/buying-a-172-car-with-a-personal-contract-plan-read-this-1.3148532

Are Florida Uber Drivers Getting a Fair Shake?

  Are Florida Uber Drivers Getting a Fair Shake? 

www.sunshinestatenews.com/story/will-florida-uber-drivers-get-fair-shake

The Dark Side of Automation: Impact on Subprime Auto Borrowers

The Dark Side of Automation: Impact on Subprime Auto Borrowers 

www.valuewalk.com/2017/07/dark-side-automation-impact-subprime-auto-borrowers/

Santander is said to plan raising stake in US auto loan unit

  Santander is said to plan raising stake in US auto loan unit 

www.businesstimes.com.sg/banking-finance/santander-is-said-to-plan-raising-stake-in-us-auto-loan-unit

Risky borrowers have piled on hundreds of billions of dollars in auto loans and credit-card debt.

Risky borrowers have piled on hundreds of billions of dollars in auto loans and credit-card debt. 

https://www.bloombergquint.com/markets/2017/07/10/crisis-flashback-the-big-downgrade-that-fueled-a-subprime-crash

Subprime Securitization Markets Sees Increased Fragmentation

Subprime Securitization Markets Sees Increased Fragmentation 

http://www.autofinancenews.net/subprime-securitization-markets-sees-increased-fragmentation/

The Little Big Short: Subprime car loans could be fuelling the next financial crash

  The Little Big Short: Subprime car loans could be fuelling the next financial crash
 
http://www.cityam.com/268185/little-big-short-subprime-car-loans-could-fuelling-next

Auto Loans Driving New U.S. Subprime Problem

 Auto Loans Driving New U.S. Subprime Problem

https://www.bloomberg.com/news/videos/b/2b493aa3-dbcb-4eed-8193-feac0549f6fc

Why the Air Is About to Come Out of America's Bubble Economy

Why the Air Is About to Come Out of America's Bubble Economy

https://www.youtube.com/watch?v=03Ke9rIYGsc

Car buyers taking on more and more finance debt

Car buyers taking on more and more finance debt 

www.thecarexpert.co.uk/car-buyers-taking-on-more-finance-debt/

Warning signs emerge in the UK car loan market

Warning signs emerge in the UK car loan market  

https://www.ft.com/content/8b6607de-6304-11e7-91a7-502f7ee26895

Consumers and Businesses Buckle under their Debts

Consumers and Businesses Buckle under their Debts 

www.marketexpress.in/2017/07/consumers-and-businesses-buckle-under-their-debts.html

Bank of England adopts tougher stance on PCP finance

Bank of England adopts tougher stance on PCP finance

https://www.motortrader.com/motor-trader-news/automotive-news/ban-england-adopts-tougher-stance-pcp-finance-04-07-2017

Lloyds attacks 'aggressive' car loan rivals

Lloyds attacks 'aggressive' car loan rivals

www.telegraph.co.uk/business/2017/07/01/lloyds-attacks-aggressive-car-loan-rivals/

FCA links up with US regulators in car loans probe

FCA links up with US regulators in car loans probe

www.telegraph.co.uk/business/2017/06/29/fca-links-us-regulators-car-loans-probe/

Will cheap car loans steer Britain to a financial crash?

Will cheap car loans steer Britain to a financial crash?

https://www.theguardian.com/money/blog/2017/jul/08/cheap-car-loans-financial-crash-consumer-credit-explosion

Credit Scores Expected to Rise, Some Artificially

 Credit Scores Expected to Rise, Some Artificially

wardsauto.com/f-i/credit-scores-expected-rise-some-artificially

Falling U.S. Auto Sales Are a Scary Sign of the Coming U.S. Recession

Falling U.S. Auto Sales Are a Scary Sign of the Coming U.S. Recession 

https://www.lombardiletter.com/auto-sales-scary-sign-coming-recession/13724/

Don't let a long car loan drive you into a ditch

  Don't let a long car loan drive you into a ditch

www.cbsnews.com/news/should-you-commit-to-a-very-long-car-loan/

Finance chief rebuffs claims that car buyers have been mis-sold

Finance chief rebuffs claims that car buyers have been mis-sold

https://www.shropshirestar.com/news/motors/2017/07/04/finance-chief-rebuffs-claims-that-car-buyers-have-been-mis-sold-loans/

Uncertainty over future of Car Finance Company

https://www.thetimes.co.uk/article/uncertainty-over-future-of-car-finance-company-s0gs9t2nt

The private equity backer of Britain’s leading sub-prime car lender has written off its entire investment in the business and withdrawn its funding, highlighting growing fears over the state of the motor finance industry.
The Car Finance Company said that there was “material uncertainty” over its future after Pine Brook, its American private equity owner, backed away from supporting the lender only two years after it had bought the business.
In accounts filed with Companies House, Pine Brook said that its £50 million investment in The Car Finance Company was not considered recoverable as the latest accounts showed that the proportion of arrears had more than doubled to 18.4 per cent in 2016 from 8.2 per cent a year earlier. Impairments rose by 371 per…

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Uber pushes drivers into shady subprime auto loans

 Uber pushes drivers into shady subprime auto loans

https://justiceleaguetaskforce.wordpress.com/2017/07/01/uber-pushes-drivers-into-shady-subprime-auto-loans/

Credit crunch WARNING: Bank of England fears reckless lenders could spark financial crisis

Credit crunch WARNING: Bank of England fears reckless lenders could spark financial crisis 

www.express.co.uk/finance/city/824555/Bank-England-sub-prime-financial-crisis-debt-credit-car-finance

Car dealers ‘offering young buyers £20,000 vehicles for no money up front risk sparking financial crisis’

Car dealers ‘offering young buyers £20,000 vehicles for no money up front risk sparking financial crisis’
https://www.thesun.co.uk/motors/3932797/car-dealers-offering-young-buyers-20000-vehicles-for-no-money-up-front-risk-sparking-financial-crisis/

Car finance: Voluntary termination of a PCP or HP What legal rights do you have to cancel your car finance midway through the agreement?

Car finance: Voluntary termination of a PCP or HP What legal rights do you have to cancel your car finance midway through the agreement?

www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

‘This golden age of cheap car deals won’t last forever’

 ‘This golden age of cheap car deals won’t last forever’

www.autoexpress.co.uk/car-news/100031/this-golden-age-of-cheap-car-deals-won-t-last-forever

Could people buying new cars on the never-never really trigger a fresh financial crisis?

Could people buying new cars on the never-never really trigger a fresh financial crisis?

http://www.thisismoney.co.uk/money/cars/article-4668644/Could-cars-sold-finance-trigger-financial-crisis.html

2 fraud veterans found start-up to fight auto lending scams

2 fraud veterans found start-up to fight auto lending scams

    www.sandiegouniontribune.com/business/economy/sd-fi-pointpredictive-funding-20170705-story.html

The Fast Track to “Carmageddon”

The Fast Track to “Carmageddon”

https://dailyreckoning.com/fast-track-carmageddon/

Exchange and Mart targets 1.6m PCP owners with Payment Swap

Exchange and Mart targets 1.6m PCP owners with Payment Swap

https://www.motortrader.com/motor-trader-news/automotive-news/exchange-mart-targets-1-6m-pcp-owners-payment-swap-06-07-2017

Loan Zone: Auto lending fraud risk is rising

  Loan Zone: Auto lending fraud risk is rising  https://www.cuinsight.com/loan-zone-auto-lending-fraud-risk-rising.html

U.S. Average Auto Loan Length Balloons to All-Time HighTaking Longer to PayBy Claire Ballentine and Jamie Butters

U.S. Average Auto Loan Length Balloons to All-Time HighTaking Longer to PayBy Claire Ballentine and Jamie Butters 

  https://www.bloomberg.com/news/articles/2017-07-05/u-s-average-auto-loan-length-balloons-to-all-time-high

Insight: is the rise in PCP car deals cause for concern?

 Insight: is the rise in PCP car deals cause for concern? https://www.autocar.co.uk/car-news/industry/insight-rise-pcp-car-deals-cause-concern

UK credit and car loan problems are building

UK credit and car loan problems are building 

https://notayesmanseconomics.wordpress.com/2017/06/27/uk-credit-and-car-loan-problems-are-building/

Wolf Richter: This Toxic Trifecta for Auto Loans is Fueling #Carmageddon

 Wolf Richter: This Toxic Trifecta for Auto Loans is Fueling #Carmageddon  

http://www.nakedcapitalism.com/2017/06/wolf-richter-toxic-trifecta-auto-loans-fueling-carmageddon.html

Chill winds in auto land Looming auto slowdown might not be a crisis—but there will be pain

Chill winds in auto land Looming auto slowdown might not be a crisis—but there will be pain  

www.bankingexchange.com/news-feed/item/6921-chill-wind-in-auto-land?Itemid=639

Are car loans heading for a crash?

 Are car loans heading for a crash? 

citywire.co.uk/new-model-adviser/news/are-car-loans-heading-for-a-crash/a1029547?section=money

After Brexit, we should just let the UK car factories close

After Brexit, we should just let the UK car factories close

http://www.newstatesman.com/politics/brexit/2017/07/after-brexit-we-should-just-let-uk-car-factories-close

£50m of 'reckless' car loans are written off: MPs demand industry comes clean on number of defaults amid increasing fears of crash

£50m of 'reckless' car loans are written off: MPs demand industry comes clean on number of defaults amid increasing fears of crash

http://www.dailymail.co.uk/news/article-4663022/50m-reckless-car-laons-written-off.html

Lenders risk another credit crunch, PRA warns

  Lenders risk another credit crunch, PRA warns 

citywire.co.uk/new-model-adviser/news/lenders-risk-another-credit-crunch-pra-warns/a1030536

Subprime Loans Are Haunting Investors and Auto Stocks

  Subprime Loans Are Haunting Investors and Auto Stocks 

money.usnews.com/investing/articles/2017-06-21/subprime-loans-are-haunting-investors-and-auto-stocks

Bad credit car finance: details of defaults on subprime car loans should be published

Bad credit car finance: details of defaults on subprime car loans should be published  

www.autoexpress.co.uk/car-news/99381/bad-credit-car-finance-details-of-defaults-on-subprime-car-loans-should-be-published

banks may be exposed to £20 billion in 'PCP' car loans that let borrowers walk away without paying

banks may be exposed to £20 billion in 'PCP' car loans that let borrowers walk away without paying

http://uk.businessinsider.com/statistics-uk-bank-exposure-pcp-car-finance-debt-2017-7

Investors increasingly wary of car loan bonds

  Investors increasingly wary of car loan bonds

https://www.ft.com/content/7a343370-5ff6-11e7-91a7-502f7ee26895

Car buyers stretch loan payments to record lengths to get in pricier vehicles

  Car buyers stretch loan payments to record lengths to get in pricier vehicles 

www.marketwatch.com/story/car-buyers-stretch-loan-payments-to-record-lengths-to-get-in-pricier-vehicles-2017-07-03

FORMER CITY COUNCIL PRESIDENT OF HOBOKEN, NJ FOUND GUILTY FOR PARTICIPATION IN CAR LOAN SCHEME

FORMER CITY COUNCIL PRESIDENT OF HOBOKEN, NJ FOUND GUILTY FOR PARTICIPATION IN CAR LOAN SCHEME 

www.empirestatenews.net/2017/07/03/former-city-council-president-of-hoboken-nj-found-guilty-for-participation-in-car-loan-scheme/

Reckless car loan salesmen exposed: How dealers are luring young drivers into massive debt by offering them new top-brand cars with NO cash up front

Reckless car loan salesmen exposed: How dealers are luring young drivers into massive debt by offering them new top-brand cars with NO cash up front

http://www.dailymail.co.uk/news/article-4659746/Reckless-car-loan-salesmen-offer-new-cars-unemployed.html#ixzz4llTpKmSZ

MPs and charities urge car leasers to publish sub-prime loan figures

  MPs and charities urge car leasers to publish sub-prime loan figures

https://www.theguardian.com/money/2017/jul/02/car-leasers-publish-sub-prime-lending-figures-mps-charities

"There is a lot of misunderstanding on how expensive it is to provide retail finance"

I think there is a lot of misunderstanding on how expensive it is to provide retail finance because banks and mortgages are able to write loans at such low rates. Most of the headline banks only offer those rates on full automated online loans that have little to no cost to super prime customers using funds provided by all the countless risk averse customers leaving money on deposit in zero interest accounts.

For dedicated FH they have to go to either PE or IB's to get their funds from the wholesale debt markets where they compete against yields from other securities for investor cash. The minimum rate would be at least higher than sovereign debt and corporate debt due to the extra risk exposure of the consumer market. So you are talking more like minimum 4 to 5 percent wholesale dost by the time the IB packaged it - and in rate pecking order the prime HNW books of Ferraris, Bentleys et all will be at the top.

Then the FH has to cover all their back office costs, admin, make good defaults etc and chase around idiots who can't manage their DD's. On a 12.5k deal at 10 percent out of 1800 interest they'll make a small profit and hope to upsell them a more profitable deal - its 1/10 of the cost to underwrite a 100k deal than 10x 10k deals so on smaller amounts the interest has to cover a proportionately bigger admin cost than a larger loan needs to.

In terms of rate for risk - the more expensive car is likely to hurt more if the deal goes south than if 3/10 of the 10k deals default, so alot of the pricing is dependent on the depreciation curve of the car, deposit and how likely the borrower is to outright steal the thing.

The car finance market is actually incredibly competetive behind the scenes - the dealer FH have to charge more because banks and mfr's FH's cream off all the low risk super prime deals leaving them with a lower quality book that dists more to wholesale fund.

The fact is that the reason the dealer rates are high is because nobody else would usually lend money to those people and they incur extra costs of dealing with idiots. A quick read of the CAF will reveal the alarming amount of people who finance cars then get into trouble within months then try every trick in the book to try and avoid paying what they owe. The FH have to price all those losses in somewhere.

Banks offer cheap money because customers give them cheap money, investments offer goid returns because consumers pay too much and don't arbitrage. If everyone took the PH'r approach and demanded to borrow at 0.5-2.5 percent while expecting 15 percent returns on their own savings the financial system would collapse. The interest rate differential is merely a arbitrage trade redistributing wealth from the uninformec to the astute - a model which the entire City of London depends on for its existance.

FH could probably lend money out cheaper, Tescos could probably sell eggs cheaper - but in a capitalist market exonomy you price what the market will bear and if you can place deals at 10 percent why would you place them at 7? 

If dealers couldn't write business at those interest rates they'd have no business, and if you don't like the rate them seemples - pay cash.

Back in 2006-2008 ish, one sub prime car finance house was obligated to give 25%+ returns to its investors, and that was assisted by the selling of the various insurance products that have probably been clamped down upon. Also significant costs involved in making sure the car dealer uses your services rather than competitors. And to maintain credibility, your Chairman/CEO,CFO/Risk officer etc needed to be from a high profile background, and to attract these people to your little outfit will again require large compensation packages.

I was told that with defaulters, finding the car could be a problem sometimes, they had deals with companies who specilaised in tracking them down all the way to European Countries..

 https://www.pistonheads.com/gassing/topic.asp?h=0&f=23&t=1662342&i=999999

Europe’s first on-demand driverless vehicle service on open roads is set to begin operating in France later this year.

  Europe’s first on-demand driverless vehicle service on open roads is set to begin operating in France later this year.

https://www.theengineer.co.uk/paris-to-host-on-demand-driverless-vehicle-service/

The Coming Carmageddon

 The Coming Carmageddon

https://dailyreckoning.com/coming-carmageddon/