Car Credit Crunch: August 2017

Wednesday 30 August 2017

Santander replaces chief of US subprime auto lender unit

Santander replaces chief of US subprime auto lender unit

https://www.ft.com/content/9bf13770-8c05-11e7-a352-e46f43c5825d

Secrets of Your New Car As concern grows around household debt, Dispatches investigates car finance, with undercover filming

Secrets of Your New Car As concern grows around household debt, Dispatches investigates car finance, with undercover filming exposing questionable sales tactics and confusing advice

http://www.channel4.com/programmes/dispatches/on-demand/66549-001

Putting facts first in the media's battle with the car loan industry

Putting facts first in the media's battle with the car loan industry

www.assetfinanceinternational.com/index.php/auto/emea/auto-emea-articles2/15779-analysis-putting-facts-first-in-the-media-s-battle-with-the-car-loan-industry

Sunday 27 August 2017

Ford To Abandon "Traditional Credit Scores" For Underwriting Decisions As Sales Stall

http://www.zerohedge.com/news/2017-08-25/ford-credit-abandon-traditional-credit-scores-sales-stall-and-subprime-delinquencies

Canada Consumer Debt Follows US, Hits Record Levels

Canada Consumer Debt Follows US, Hits Record Levels

https://www.valuewalk.com/2017/08/canadas-consumer-debt/

Ford Lowering Loan Standards To Boost Sales As Delinquencies, Defaults On Rise

Ford Lowering Loan Standards To Boost Sales As Delinquencies, Defaults On Rise

https://www.valuewalk.com/2017/08/auto-loan-delinquencies/

American Credit Acceptance bundled leftover loans from some paid-off asset-backed transactions to fortify its latest $234.1 million deep-subprime vehicle securitization.

American Credit Acceptance bundled leftover loans from some paid-off asset-backed transactions to fortify its latest $234.1 million deep-subprime vehicle securitization.

https://asreport.americanbanker.com/news/called-collateral-enhances-acas-234m-subprime-auto-deal

Saturday 26 August 2017

Why Auto Title Loans Are a Bad Idea

Why Auto Title Loans Are a Bad Idea

host.madison.com/business/investment/markets-and-stocks/why-auto-title-loans-are-a-bad-idea/article_afea3de1-7dba-5978-b339-b983ce25a151.html

Friday 25 August 2017

'Self-driving' lorries to be tested on UK roads

'Self-driving' lorries to be tested on UK roads

www.bbc.co.uk/news/technology-41038220

Thursday 24 August 2017

Growth at any cost - Financial suicide in subprime autos by UBER dissected by Max Kaiser & Stacey

Growth at any cost - Financial suicide in subprime autos by UBER dissected by Max Kaiser & Stacey

https://www.rt.com/shows/keiser-report/400226-episode-max-keiser-1112/

Wednesday 23 August 2017

Start of a New Trend? Pullback in Subprime Loans Observed

Start of a New Trend? Pullback in Subprime Loans Observed

https://globenewswire.com/news-release/2017/08/16/1086513/0/en/Start-of-a-New-Trend-Pullback-in-Subprime-Loans-Observed.html

Used-Vehicle Depreciation Surges Amid Rising Incentives, Leasing, Repos

Used-Vehicle Depreciation Surges Amid Rising Incentives, Leasing, Repos

www.autofinancenews.net/used-vehicle-depreciation-surges-amid-rising-incentives-leasing-repos/

Tuesday 22 August 2017

Ford announces £2,000 scrappage scheme for pre-2010 cars

Ford announces £2,000 scrappage scheme for pre-2010 cars

www.bbc.co.uk/news/business-41005208

Monday 21 August 2017

Westlake Financial Services Completes Largest Ever ABS (Asset-Backed Securitization) at $800 Million

Westlake Financial Services Completes Largest Ever ABS (Asset-Backed Securitization) at $800 Million

www.businesswire.com/news/home/20170821005751/en/Westlake-Financial-Services-Completes-Largest-ABS-800

Living in a Car on $800 a Month

https://www.youtube.com/watch?v=b0EoyTzcFOI

Bank in new alert over car finance dangers: Unexpected fall in sales leading to dealers offering increasingly high-risk deals

Bank in new alert over car finance dangers: Unexpected fall in sales leading to dealers offering increasingly high-risk deals

www.dailymail.co.uk/news/article-4794264/Bank-new-alert-car-finance-dangers.html

Are Bank of England's £78billion loans fuelling consumer debt bubble? Fears decision to lend money could lead to another financial crisis

Are Bank of England's £78billion loans fuelling consumer debt bubble? Fears decision to lend money could lead to another financial crisis

www.dailymail.co.uk/news/article-4807962/Fears-debt-bubble-caused-Bank-England-fund.html

Banks are cutting back on lending to the riskiest borrowers

Banks are cutting back on lending to the riskiest borrowers

http://uk.businessinsider.com/credit-score-transunion-subprime-loan-originations-2017-8

Flagship Continues to Reduce Loan Terms, Latest ABS Shows

www.autofinancenews.net/flagship-continues-to-reduce-loan-terms-latest-abs-shows/

The Latest Predatory Banking Practice You Haven’t Heard About: Auto Loans

The Latest Predatory Banking Practice You Haven’t Heard About: Auto Loans

The subprime auto-loan industry is now worth about $26 billion.

https://www.thenation.com/article/the-latest-predatory-banking-practice-you-havent-heard-about-auto-loans/

Car finance's lack of transparency is hurting consumers

Car finance's lack of transparency is hurting consumers

https://www.digitallook.com/news/news-and-announcements--/comment-car-finances-lack-of-transparency-is-hurting-consumers--2819394.html

Absolute control of money corrupts absolutely

Absolute control of money corrupts absolutely

Now auto sub-prime Similar to the sub-prime mortgage loans (i.e. loans to people who would not qualify for one), bankers and auto dealers, backed by auto companies, are offering loans to, as the website

www.zerohedge.com says, ‘anyone with a pulse is entitled to a 0 per cent down, 0 per cent interest, 80 month loan on a brand new $40,000 vehicle’. The outstanding value of sub-prime auto loans is $ 1.2 trillion.

During the sub-prime mortgage crisis of 2008, lenders made one assumption and one fiendishly clever move.
The assumption was that home prices would keep rising, so that, if an unqualified borrower defaulted (as was likely) the bank could always recoup its money because the price rise would cover the loan default.

www.thehindubusinessline.com/markets/stock-markets/absolute-control-of-money-corrupts-absolutely/article9823033.ece

Lib Dem leader Sir Vince Cable fearful over second credit crunch

Lib Dem leader Sir Vince Cable fearful over second credit crunch

http://www.sundaypost.com/fp/lib-dem-leader-sir-vince-cable-fearful-over-second-credit-crunch/

Lloyds pushes £60k car loans without ANY credit checks: Banks become embroiled in row over reckless lending after mass-mailing customers about luxury vehicles

Lloyds pushes £60k car loans without ANY credit checks: Banks become embroiled in row over reckless lending after mass-mailing customers about luxury vehicles

www.dailymail.co.uk/news/article-4804210/Lloyds-pushes-60k-car-loans-without-credit-checks.html

UK car dealers feel chill of falling sales

UK car dealers feel chill of falling sales
Financial Times

Marshall Motors, another big UK dealership, reported this week that 83 per cent of new and 62 per cent of its used cars were sold on PCP plans.

http://www.ft.com/content/20760daa-840d-11e7-94e2-c5b903247afd

Wednesday 16 August 2017

Bloomberg Markets: Tempkin on Deep Subprime Car Loans Crisis

Bloomberg Markets: Tempkin on Deep Subprime Car Loans Crisis

https://www.bloomberg.com/news/audio/2017-08-16/bloomberg-markets-tempkin-on-deep-subprime-car-loans-crisis

Making Sense: There’s Something Odd In The Auto Market

Making Sense: There’s Something Odd In The Auto Market

https://learnbonds.com/134987/making-sense-theres-something-odd-in-the-auto-market/

UK car lenders vulnerable after surge in risky loans - BoE

UK car lenders vulnerable after surge in risky loans - BoE

https://www.irishtimes.com/business/transport-and-tourism/uk-car-lenders-vulnerable-after-surge-in-risky-loans-boe-1.3187607

India says no to driverless cars to protect jobs

India says no to driverless cars to protect jobs

http://www.bbc.co.uk/news/technology-40716296

‘Deep’ Subprime Car Loans Hit Crisis-Era Milestone

‘Deep’ Subprime Car Loans Hit Crisis-Era Milestone

https://www.bloomberg.com/news/articles/2017-08-15/-deep-subprime-car-loans-hit-crisis-era-milestone-as-woes-mount

Tuesday 15 August 2017

Headwinds for UK used car prices cause for ABS concern, says BAML

Headwinds for UK used car prices cause for ABS concern, says BAML

www.globalcapital.com/article/b149kb89s5sbst/headwinds-for-uk-used-car-prices-cause-for-abs-concern-says-baml

Friday 11 August 2017

Where Dodd-Frank Didn't Go Far Enough exemption for auto lenders has led to a dangerous bubble

Where Dodd-Frank Didn't Go Far Enough exemption for auto lenders has led to a dangerous bubble

https://www.bloomberg.com/view/articles/2017-08-10/where-dodd-frank-didn-t-go-far-enough

Uber’s divorce from auto leasing business highlights subprime market risks

Uber’s divorce from auto leasing business highlights subprime market risks

https://www.marketplace.org/2017/08/10/business/uber-s-divorce-auto-leasing-business-highlights-subprime-market-risks

Thursday 10 August 2017

Wells Fargo Plans to Compensate Car-Loan Customers Who Received Unwanted Auto Insurance

Wells Fargo Plans to Compensate Car-Loan Customers Who Received Unwanted Auto Insurance

www.bodyshopbusiness.com/wells-fargo-plans-compensate-car-loan-customers-received-unwanted-auto-insurance/

highest credit card debt in the history of the USA $1 TRILLION

highest credit card debt in the history of the USA $1 TRILLION

www.malaysia-chronicle.com/us1-021-trillion-of-credit-card-debts-no-its-not-najib-rosmah-but-american-consumers-u-s-creates-history/

Risk Premiums on Subprime Auto Debt Are Sinking Near Record Lows

Risk Premiums on Subprime Auto Debt Are Sinking Near Record Lows

https://www.bloombergquint.com/global-economics/2017/08/08/risk-premiums-on-subprime-auto-debt-are-sinking-near-record-lows

Second Hand, Second Rate?

Second Hand, Second Rate?

https://fleetworld.co.uk/second-hand-second-rate/

Wall Street Thieves Find New Ways to Steal From Us

Wall Street Thieves Find New Ways to Steal From Us

https://www.commondreams.org/views/2017/08/09/wall-street-thieves-find-new-ways-steal-us

Sure enough, only a decade later, here they come again! Rather than investing America's capital in real businesses to generate grassroots jobs and shared prosperity, Wall Street is siphoning billions of investment dollars into speculative nonsense — such as high-profit securities "secured" only by rickety bundles of subprime auto loans.

Car dealers, eager to goose up sales, have been hawking new vehicles to lower-income people, offering quick credit approval. Banks — eager to hook more people on monthly car payments — have been approving these subprime car loans without verifying the buyer's ability to pay. Then, a Wall Street bank's investment house buys up thousands of these iffy individual loans, bundles them into multimillion-dollar "debt securities," and sells them to wealthy global speculators. Last year alone, banks sold $26 billion-worth of these explosive bundles of car loans.

This is just another paper-shuffling con game, a repeat of Wall Street's subprime mortgage scam a decade ago. It generates fast, easy money at the start for superrich speculators and greedy banksters — but as more and more low-income buyers are unable to make their car payments, defaults build up and the whole financial bubble pops.

Wasting America's much-needed investment capital on a predatory lending scheme that intentionally puts people in cars they can't afford with loans they can't repay is not only stupid, but immoral... and it's killing our real economy. Why are we letting elite Wall Street loan sharks do this to us?

These same practices of bundling and re-selling were the cause of the 2007 crash in the housing market that led to millions of American families losing their homes. But, 10 years later ... where did all those houses go?

BMW offers cash incentive to trade in older diesels

BMW offers cash incentive to trade in older diesels

https://www.whatcar.com/news/bmw-diesel-cash/

Wednesday 9 August 2017

Uber is phasing out its subprime car-leasing division after massive losses

Uber is phasing out its subprime car-leasing division after massive losses

https://www.theverge.com/2017/8/8/16112498/uber-phase-out-xchange-car-leasing-losses

Tuesday 8 August 2017

FCA car finance probe puts a priority on customer welfare Fairness and transparency of car finance deals being questioned

FCA car finance probe puts a priority on customer welfare Fairness and transparency of car finance deals being questioned

www.thecarexpert.co.uk/fca-car-finance-probe-puts-a-priority-on-customer-welfare/

New Uk cars sales fall for fourth month in a row

New UK cars sales fall for fourth month in a row

https://inews.co.uk/essentials/lifestyle/cars/car-news/new-cars-sales-fall-fourth-month-row/

Santander Spells Out Dealer Fraud Protections, Income Verification Process

www.autofinancenews.net/santander-spells-out-dealer-fraud-protections-income-verification-process/

The Auto Industry Has Hit a Worrying Peak, Doug Kass Reveals 8 Telling Reasons Why

https://www.thestreet.com/story/14230266/1/peak-autos-market-musings-doug-kass-views.html

1. Car companies are offering the largest incentives on price in years.

2. The automobile inventory-to-sales and days-to-turn-sales ratios are back to elevated 2008 levels.

3. Used-car prices (the Manheim Index) have steadily declined.

4. A record level of autos are going off lease and will return to and further depress the used-car market.

5. After years of subsidized, low-rate auto loans, the consumer is spent up, not pent up, as car sales have been pulled forward.

6. Subprime auto loan delinquencies are ratcheting higher, and some auto lenders are turning away from the market.

7. Managements have poorly prepared for the auto down cycle.

8. The risks of protectionism and trade wars have recently increased.

Monday 7 August 2017

PCP car deals: hidden insurance trap revealed

PCP car deals: hidden insurance trap revealed

http:// www.telegraph.co.uk/financial-services/motoring/pcp-car-deals-insurance-trap/

Quote
....New cars will almost always start going down in value from the moment you buy them, so if you need to make a claim, insurers will only compensate you for the current market value, and not the value of the car when it was brand new - leaving you with a shortfall to pay.
So with PCP car deals you could be faced with unexpected bills if you have an accident, or if your car is stolen, as the ‘protection’ it offers only comes once the PCP loan term comes to an end, when most people hand the car back.
And with 450,000 vehicles written off every year in accidents, and over 76,000 stolen, the risks are high. There has been a significant rise in motorists defaulting on payments for new car loans, with the total amount of car finance debt going up 15% in the past year.
MotorEasy founder, Duncan McClure Fisher, said:
“Before that settlement figure is paid at the end of the agreement, you are just as exposed as with any other finance arrangement.”

Trust the data: Auto lending is sound

Saturday 5 August 2017

High interest rates, quick repossessions dog auto buyers with poor credit

www.tbo.com/news/business/autos/high-interest-rates-quick-repossessions-dog-auto-buyers-with-poor-credit/2332658

Britain's leading sub-prime lender reveals it will close

http://www.dailymail.co.uk/news/article-4762822/Fears-mount-UK-sub-prime-lender-reveals-close.html

Highways England is considering plans to cover busy roads in canopy-style tunnels in a bid to cut down on pollution levels.

Highways England is considering plans to cover busy roads in canopy-style tunnels in a bid to cut down on pollution levels.

www.ukconstructionweek.com/news/construction-buzz/1586-roads-could-be-covered-by-tunnels-to-cut-traffic-fumes-construction-buzz-127

The serious risk is that the bond holder is leveraged so their 10% bond value hit transpires to be a 100-200% hit

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

Yes. The serious risk is that the bond holder is leveraged so their 10% bond value hit transpires to be a 100-200% hit. Their lender gives them a margin call and they default, thus the counter party carries the loss. Enough of that and the counter parties then start to struggle to handle the losses.

The risk to manufacturers is that a sudden change in bond pricing could be a toxic shock to their business model that sees them unable to react quickly enough to pass the cost down the line to the consumer or for the consumers to stop buying their credit. The balance sheets of the manufacturers are not exactly robust. They are all heavily laden with debt, the cost of which would likely be raised to reflect their weaker economic status etc.

The other issue for manufacturers is that having converted the entire retail consumer action into monthly debt consumption and quick rise in retail financing costs would arguably see huge and rapid changes in what the consumers are purchasing with their fixed monthly packages. Such changes would almost certainly occur quicker than a manufacturer could change its direction. For example, will consumers keep buying the same model of car but drop all the options or drop down the model range or move to cheaper brands. Any of those changes present a very big hit to manufacturers if they happen quicker than they can react.

The key thing is that consumer debt has been put on the tabloid front pages and on the desk of the regulators before it is a very serious risk and so now we just need to see if there is a response or if it is ignored. What we do know is that consumers cannot self regulate so they will keep consuming until they implode or the system implodes around them so it must be the lenders who must be steered and the bond holders so that whatever happens it is not another problem for the taxpayer to fund.

Tuesday 1 August 2017

Big Three auto sales fall hard in July

Big Three auto sales fall hard in July

http://uk.businessinsider.com/us-auto-sales-july-2017-8

Outlook darkens for UK debt collateral Moody’s stance turns negative on loans bundled into asset-backed securities

Outlook darkens for UK debt collateral
Moody’s stance turns negative on loans bundled into asset-backed securities

https://www.ft.com/content/155fa67e

Moody’s has raised the alarm over a wide range of UK consumer loans that are bundled together and sold to institutional investors

Auto loans, credit cards, buy-to-let mortgages and so-called “non-conforming” mortgages

2015 subprime vintage suffers losses not seen since 2005

http://www.autoremarketing.com/subprime/2015-subprime-vintage-suffers-losses-not-seen-2005

Subprime Auto Loan Defaults on the Rise Bill Black the white collar criminologist says It is a very severe problem for consumers

Subprime Auto Loan Defaults on the Rise Bill Black the white collar criminologist says It is a very severe problem for consumers who are going to lose not only their cars, but their credit ratings

therealnews.com/t2/story:19641:Subprime-Auto-Loan-Defaults-on-the-Rise