Private Student Loans, FinAid, Loans, subprime auto lenders.#Subprime #auto #lenders


Private Student Loans

Private student loan volume grows when federal student loan limits remain stagnant.

Private student loan volume grew much more rapidly than federal student loan volume through mid-2008, in part because aggregate loan limits on the Stafford loan remained unchanged from 1992 to 2008. (The introduction of the Grad PLUS loan on July 1, 2006 and the increases in the annual but not aggregate limits had only a modest impact on the growth of private student loan volume. The subprime mortgage credit crisis of 2007-2010, however, limited lender access to the capital needed to make new loans, reining in growth of the private student loan marketplace.) The annual increase in private student loan volume was about 25% to 35% per year, compared with 8% per year for federal loan volume.

In addition to these lists of private student loan programs, there are several web sites that provide tools for comparing private student loans. These tools can help you identify the loans that match your criteria. These student loan comparison sites include Credible and other student loan comparison sites.

Then the Ensuring Continued Access to Student Loans Act of 2008 increased the annual and aggregate loan limits on the federal Stafford loan starting July 1, 2008. This shifted significant loan volume from private student loan programs to federal. Private student loan volume dropped in half in 2008-09, according to the College Board’s Trends in Student Aid 2009.

Private student loan volume is expected to return to the 25% annual growth rate unless there is another increase in federal loan limits or an expansion of the availability of federal student loans. For example, the proposal for expanding Perkins loan funding from $1 billion a year to $8.5 billion a year will cause a significant decline in private student loan volume. But so long as federal loan limits do not increase every year, private student loan volume will continue to grow at double-digit rates.

If current trends continue, annual private education loan volume will surpass federal student loan volume by around 2030. Accordingly, it is important that students have tools they can use to compare different private student loans.

As a general rule, students should only consider obtaining a private education loan if they have maxed out the Federal Stafford Loan. They should also file the Free Application for Federal Student Aid (FAFSA), which may qualify them for grants, work-study and other forms of student aid. Undergraduate students should also compare costs with the Federal PLUS Loan, as the PLUS loan is usually much less expensive and has better repayment terms.

The fees charged by some lenders can significantly increase the cost of the loan. A loan with a relatively low interest rate but high fees can ultimately cost more than a loan with a somewhat higher interest rate and no fees. (The lenders that do not charge fees often roll the difference into the interest rate.) A good rule of thumb is that 3% to 4% in fees is about the same as a 1% higher interest rate.

Be wary of comparing loans with different repayment terms according to APR, as a longer loan term reduces the APR despite increasing the total amount of interest paid. FinAid’s Loan Analyzer Calculator may be used to generate an apples-to-apples comparison of different loan programs.

The best private student loans will have interest rates of LIBOR + 2.0% or PRIME – 0.50% with no fees. Such loans will be competitive with the Federal PLUS Loan. Unfortunately, these rates often will be available only to borrowers with great credit who also have a creditworthy cosigner. It is unclear how many borrowers qualify for the best rates, although the top credit tier typically encompasses about 20% of borrowers.

Generally, borrowers should prefer loans that are pegged to the LIBOR index over loans that are pegged to the Prime Lending Rate, all else being equal, as the spread between the Prime Lending Rate and LIBOR has been increasing over time. Over the long term a loan with interest rates based on LIBOR will be less expensive than a loan based on the Prime Lending Rate. About half of lenders peg their private student loans to the LIBOR index and about 2/5 to the Prime lending rate.

Some lenders use the LIBOR rate because it reflects their cost of capital. Other lenders use the Prime Lending Rate because PRIME + 0.0% sounds better to consumers than LIBOR + 2.80% even when the rates are the same.

It is not uncommon for lenders to advertise a lower rate for the in-school and grace period, with a higher rate in effect when the loan enters repayment.

Federal student loans are not available for expenses incurred by law, medical and dental students after they graduate, such as expenses associated with study for the bar or finding a residency. There are two types of private student loans for these expenses:

  • A Bar Study Loan helps finance bar exam costs such as bar review course fees, bar exam fees, as well as living expenses while you are studying for the bar.
  • A Residency and Relocation Loan helps medical and dental students with the expenses associated with finding a residency, including interview travel expenses and relocation costs, as well as board exam expenses.

Comparing Private Student Loans

Key information to understand student loans includes being aware of the annual and cumulative loan limits, interest rates, fees, and loan term for the most popular private student loan programs. Often the interest rates, fees and loan limits depend on the credit history of the borrower and co-signer, if any, and on loan options chosen by the borrower such as in-school deferment and repayment schedule. Loan term often depends on the total amount of debt.

Most lenders that require school certification (approval) will cap the annual loan amount at cost of education less aid received (COA-Aid). They may also have an annual dollar limit as well.

Lenders rarely give complete details of the terms of the private student loan until after the student submits an application, in part because this helps prevent comparisons based on cost. For example, many lenders will only advertise the lowest interest rate they charge (for good credit borrowers). Borrowers with bad credit can expect interest rates that are as much as 6% higher, loan fees that are as much as 9% higher, and loan limits that are two-thirds lower than the advertised figures.

The APRs for variable rate loans, if listed, are only the current APRs and are likely to change over the term of the loan. Borrowers should be careful about comparing loans based on the APR, as the APR may be calculated under different assumptions, such as a different number of years in repayment. All else being equal, a longer repayment term will have a lower APR even though the borrower will pay more in interest.

The information presented below is based on lender provided information. Actual rates and fees may differ.

The Mortgage Lender Implode-O-Meter – tracking the housing finance breakdown, related to Alt-A and subprime mortgages, lending fraud, predatory lending, housing bubble, mortgage banking, foreclosures, debt, consolidation, lawyers, class-action lawsuits, subprime auto lenders.#Subprime #auto #lenders


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  • White Plains CPA Sentenced To 22 Months In The Big House – [2017-11-10]
  • Suffolk County Attorney Indicted For Money Laundering – [2017-11-10]
  • Madoff victims set to receive $772 million payout – [2017-11-09]
  • Equifax profit falls as hacking costs take toll – [2017-11-09]
  • Macy’s Gains On Cost-Cuts As Peers Ail – [2017-11-09]
  • Foreclosed $51 Million “Billionaire’s Row” Penthouse Sells At A 30% Discount – [2017-11-09]
  • Wall St. retreats on worries over delays in tax-cut plan – [2017-11-09]
  • Dissecting the “$250 Billion” China Deals Trump Got for U.S. – [2017-11-09]
  • Bitcoin Fork Called Off: Prices Soar After SegWit2X Fails – [2017-11-09]

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ML-Implode.com was created in late 2006 to raise the alarm about the then-burgeoning implosion of the historically-epic housing and economic bubble. Started as a modest web page created by founder Aaron Krowne, this objective was achieved by, uniquely, tracking the in-progress implosion of independent mortgage lending companies then being ignored by a mainstream media in denial of even the existence of the housing bubble. At that time, you were more likely to hear a partyline of “housing always goes up” and juvenile jeers of “bubbles are for bathtubs” from TV’s talking heads, than of even slight concern about a clearly-overextended, already-frozen housing market.

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Subprime auto lenders

What bubble, subprime auto loans.#Subprime #auto #loans


What bubble? Subprime vehicle loans hit Q1 10-year low; 30-day delinquencies drop

June 7, 2017 by Subprime auto loansMelinda Zabritski

Subprime auto loans

When discussing automotive lending, it seems like one term is on everyone’s lips: “subprime auto loan bubble.” There’s always someone who claims that the bubble is bursting. But a level-headed look at the data shows otherwise.

According to our Q1 2017 State of the Automotive Finance Market report, 30-day delinquencies dropped and subprime auto lending reached a 10-year record low for Q1. The 30-day delinquency rate dropped from 2.1 percent in Q1 2016 to 1.96 percent in Q1 2017, while the total share of subprime and deep-subprime loans dropped from 26.48 percent in Q1 2016 to 24.1 percent in Q1 2017.

The truth is, lenders are making rational decisions based on shifts in the market. When delinquencies started to go up, the lending industry shifted to more creditworthy customers. This is borne out in the rise in customers’ average credit scores for both new and used vehicle loans:

  • The average customer credit score for a new vehicle loan rose from 712 in Q1 2016 to 717 in Q1 2017.
  • The average customer credit score for a used vehicle loan rose from 645 in Q1 2016 to 652 in Q1 2017.

In a clear indication that lenders have shifted focus to more creditworthy customers, super prime was the only risk tier to grow for new vehicle loans from Q1 2016 to Q1 2017. Super-prime share moved from 27.4 percent in Q1 2016 to 29.12 percent in Q1 2017. All other risk tiers lost share in the new vehicle loan category:

  • Prime — 43.36 percent, Q1 2016 to 43.04 percent, Q1 2017.
  • Nonprime — 17.83 percent, Q1 2016 to 16.96 percent in Q1 2017.
  • Subprime — 10.64 percent, Q1 2016 to 10.1 percent in Q1 2017.

For used vehicle loans, there was a similar upward shift in creditworthiness. Prime and super-prime risk tiers combined for 47.4 percent market share in Q1 2017, up from 43.99 percent in Q1 2017. At the low end of the credit spectrum, subprime and deep-subprime share fell from 34.31 percent in Q1 2016 to 31.27 percent in Q1 2017.

The upward shift in used vehicle loan creditworthiness is likely caused by an ample supply of late model used vehicles. Leasing has been on the rise for the past several years (and is at 31.06 percent of all new vehicle financing today). Many of these leased vehicles have come back to the market as low-mileage used vehicles, perfect for CPO programs.

Another key indicator of the lease-to-CPO impact is the rise in used vehicle loan share for captives. In Q1 2017, captives had 8.3 percent used vehicle loan share, compared with 7.2 percent in Q1 2016.

In other findings:

  • Captives continued to dominate new vehicle loan share, moving from 49.4 percent in Q1 2016 to 53.9 percent in Q1 2017.
  • 60-day delinquencies showed a slight rise, going from 0.61 percent in Q1 2016 to 0.67 percent in Q1 2017.
  • The average new vehicle loan reached a record high: $30,534.
  • The average monthly payment for a new vehicle loan reached a record high: $509.

Auto Lenders, Collateral Management GPS Tracking, subprime auto lenders.#Subprime #auto #lenders


subprime auto lenders

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      Subprime auto lenders Subprime auto lenders

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        • Rental Car
        • Trailer Transportation
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        • Commercial Fleets
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        • Trailer Management
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        • Lot Management
        • Service Retention
        • Fuel Management
      • Products
        • FLEETLOCATE

          for Fleet Tracking

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        • GOLDSTAR

          for Used Car Dealers

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          for Car Buyers

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          Spireon GoldStar Lender is a Win-Win for Consumers and Lenders

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          • Marketing and field-training support to the lender’s field-sales team and dealer base.
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Lenders hit the brakes on subprime auto loans, subprime auto lenders.#Subprime #auto #lenders


Lenders hit the brakes on subprime auto loans

Subprime auto lenders

Lenders and finance companies have dramatically pulled back the number of loans they issue to borrowers with the poorest credit records.

A new report by Experian shows the number of loans written in the first quarter for borrowers with subprime and deep subprime credit ratings fell to a 10-year low. Collectively, auto-loan originations in those two categories dropped 8.6 percent in the first quarter.

“It does appear the industry is policing itself a little bit more,” said Melinda Zabritski, Experian senior director of financial solutions. “We started to see delinquencies go up, and lenders really seemed to respond especially in Q1 of this year by tightening up a little bit.”

The pullback in loans to those with credit scores under 600 echoes reports from auto dealers about lenders tightening credit standards.

In its monthly dealer survey, UBS found almost a third of the dealers questioned reported tighter credit standards, the highest level measured in the survey since 2009.

Despite the slowdown in new loans to subprime and deep subprime borrowers, those with the poorest credit ratings still owe more than $213 billion on the vehicles they’re driving, just under 20 percent of the $1.08 trillion owed on open auto loans.

Last week, Federal Reserve Governor Lael Brainard warned about the potential for more subprime auto loan defaults.

“Underwriting appears to be quite lax last year in subprime auto lending,” said Brainard. “Delinquencies rates suggest some borrowers are struggling to keep up with payments.”

The latest data from Experian supports Brainard’s point. In the first quarter, the 60-day delinquency rate jumped almost 10 percent, according to Experian. By comparison, the 30-day delinquency rate fell 6 percent.

Still, with fewer than 1 percent of all auto loans being two months delinquent, Zabritski believes warnings about a subprime bubble suddenly popping are overstated.

“I don’t believe we are in a catastrophic state,” she said. “Everyone always talks about lenders having short memories and forgetting from the past, but again we really started to see that pullback and it just really continued into the first quarter.”

Subprime auto lenders

Auto Industry Benefits For Now From Subprime Loans: NPR, subprime auto loans.#Subprime #auto #loans


Auto Industry Benefits For Now From Subprime Loans

Subprime auto loans

A factor in the auto industry’s record sales the past 2 years has been the return of loans to borrowers with less than perfect credit. This has led some to worry about a bubble in subprime auto loans.

RACHEL MARTIN, HOST:

Subprime lending is back. We’re not talking about homes this time. Automakers and banks have been extending more credit to those with less than perfect credit scores, and that has some worried about a subprime car bubble. Here’s NPR’s Sonari Glinton.

SONARI GLINTON, BYLINE: As much as I love late-night talk shows, I know that as a reporter, whenever a late-night comedian sets his or her sights on my beat – cars and the economy – I’m going to have a lot of explaining to do. Here’s John Oliver talking about car loans on HBO’s “Last Week Tonight.” Remember, it’s HBO, so there will be bleeps.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN OLIVER: And this feeding frenzy over subprime customers now includes big lenders, like Santander and GM Financial. They have both expanded their subprime auto financing. And you might be wondering, why the [expletive] is everyone in such a hurry to lend money to people with bad credit? I mean, sure.

GLINTON: To help answer Mr. Oliver’s question, we turn to.

LACEY PLACHE: OK, hi. I’m Lacey Plache, chief economist at edmunds.com.

GLINTON: Chief economist – is that a promotion?

PLACHE: No, I’ve always been the chief economist.

GLINTON: Economist, not comedian, Plache says. The reason why the industry is looking to sell cars to people with less than stellar credit is, well, because jobs.

PLACHE: There are definite benefits to having access to credit, especially for an automobile because that really gives people a lot more options in terms of work.

GLINTON: For many millions of Americans, the only way to get to work is to drive yourself there. Plache says during the economic collapse, access to credit dried up, and that hurt people with poor credit scores. Poor credit means below 650. Now, you could easily fall into that category if you miss a few credit card payments. As the banks and the car companies extend credit to a wider range of people, they’re going to take on more risk.

PLACHE: You are going to see higher delinquency rates, higher defaults than you did during the days where the auto lenders were really focusing the majority of their efforts on super-prime and prime. And, you know, I think there’s some love of drama, right? Some people like to worry, and, you know, this is something to point to.

GLINTON: Now, comparisons between the credit market for cars and real estate are difficult because the car market is one-tenth as large.

ALEC GUTIERREZ: I wouldn’t say that the sky is falling, but I think it is fair to say that there has been an expansion in subprime lending overall. And that’s true of both new car purchases, used car purchases and leasing.

GLINTON: Alec Gutierrez is senior analyst with Kelley Blue Book. He points out that the risks for lenders are lower for autos than for real estate. And cars are easier to repossess, and that’s one reason consumers often pay their car loan first. It’s also a way for consumers to establish credit.

GUTIERREZ: You still have a lot of people that are rebuilding credit that have gone through foreclosures and, thus, have poor credit. These people still need a way to get to work, to get around town. Their vehicles – they age. They get old. They need to be replaced. And thus, you’ve got this continuous stream of subprime borrowers just looking for a way to get into a car.

GLINTON: Gutierrez says subprime auto lending boomed before the financial crisis, then plummeted with the financial collapse and is now beginning to get back to normal. He says the industry isn’t taking great risks, but some borrowers will be hurt.

GUTIERREZ: It’s devastating at a personal level when you can’t make those payments. You lose your car. You can’t go to work. You can’t pay the bills. But in terms of it being a systemic risk to the entire auto industry or the economy as a whole, it just doesn’t carry the same sort of weight and magnitude as the mortgage industry did, especially the way it was structured back in 2008.

GLINTON: Gutierrez says buyers need to shop around – go directly to the banks, credit unions before you go to the dealership. And if you’re in the car market, you always have options, even if your credit has taken a hit. Sonari Glinton, NPR News.

(SOUNDBITE OF KORESMA’S, “THE THEORY”)

Copyright 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR s programming is the audio record.

Auto Industry Benefits For Now From Subprime Loans: NPR, subprime auto lenders.#Subprime #auto #lenders


Auto Industry Benefits For Now From Subprime Loans

Subprime auto lenders

A factor in the auto industry’s record sales the past 2 years has been the return of loans to borrowers with less than perfect credit. This has led some to worry about a bubble in subprime auto loans.

RACHEL MARTIN, HOST:

Subprime lending is back. We’re not talking about homes this time. Automakers and banks have been extending more credit to those with less than perfect credit scores, and that has some worried about a subprime car bubble. Here’s NPR’s Sonari Glinton.

SONARI GLINTON, BYLINE: As much as I love late-night talk shows, I know that as a reporter, whenever a late-night comedian sets his or her sights on my beat – cars and the economy – I’m going to have a lot of explaining to do. Here’s John Oliver talking about car loans on HBO’s “Last Week Tonight.” Remember, it’s HBO, so there will be bleeps.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN OLIVER: And this feeding frenzy over subprime customers now includes big lenders, like Santander and GM Financial. They have both expanded their subprime auto financing. And you might be wondering, why the [expletive] is everyone in such a hurry to lend money to people with bad credit? I mean, sure.

GLINTON: To help answer Mr. Oliver’s question, we turn to.

LACEY PLACHE: OK, hi. I’m Lacey Plache, chief economist at edmunds.com.

GLINTON: Chief economist – is that a promotion?

PLACHE: No, I’ve always been the chief economist.

GLINTON: Economist, not comedian, Plache says. The reason why the industry is looking to sell cars to people with less than stellar credit is, well, because jobs.

PLACHE: There are definite benefits to having access to credit, especially for an automobile because that really gives people a lot more options in terms of work.

GLINTON: For many millions of Americans, the only way to get to work is to drive yourself there. Plache says during the economic collapse, access to credit dried up, and that hurt people with poor credit scores. Poor credit means below 650. Now, you could easily fall into that category if you miss a few credit card payments. As the banks and the car companies extend credit to a wider range of people, they’re going to take on more risk.

PLACHE: You are going to see higher delinquency rates, higher defaults than you did during the days where the auto lenders were really focusing the majority of their efforts on super-prime and prime. And, you know, I think there’s some love of drama, right? Some people like to worry, and, you know, this is something to point to.

GLINTON: Now, comparisons between the credit market for cars and real estate are difficult because the car market is one-tenth as large.

ALEC GUTIERREZ: I wouldn’t say that the sky is falling, but I think it is fair to say that there has been an expansion in subprime lending overall. And that’s true of both new car purchases, used car purchases and leasing.

GLINTON: Alec Gutierrez is senior analyst with Kelley Blue Book. He points out that the risks for lenders are lower for autos than for real estate. And cars are easier to repossess, and that’s one reason consumers often pay their car loan first. It’s also a way for consumers to establish credit.

GUTIERREZ: You still have a lot of people that are rebuilding credit that have gone through foreclosures and, thus, have poor credit. These people still need a way to get to work, to get around town. Their vehicles – they age. They get old. They need to be replaced. And thus, you’ve got this continuous stream of subprime borrowers just looking for a way to get into a car.

GLINTON: Gutierrez says subprime auto lending boomed before the financial crisis, then plummeted with the financial collapse and is now beginning to get back to normal. He says the industry isn’t taking great risks, but some borrowers will be hurt.

GUTIERREZ: It’s devastating at a personal level when you can’t make those payments. You lose your car. You can’t go to work. You can’t pay the bills. But in terms of it being a systemic risk to the entire auto industry or the economy as a whole, it just doesn’t carry the same sort of weight and magnitude as the mortgage industry did, especially the way it was structured back in 2008.

GLINTON: Gutierrez says buyers need to shop around – go directly to the banks, credit unions before you go to the dealership. And if you’re in the car market, you always have options, even if your credit has taken a hit. Sonari Glinton, NPR News.

(SOUNDBITE OF KORESMA’S, “THE THEORY”)

Copyright 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR s programming is the audio record.

Lenders hit the brakes on subprime auto loans, subprime auto loans.#Subprime #auto #loans


Lenders hit the brakes on subprime auto loans

Subprime auto loans

Lenders and finance companies have dramatically pulled back the number of loans they issue to borrowers with the poorest credit records.

A new report by Experian shows the number of loans written in the first quarter for borrowers with subprime and deep subprime credit ratings fell to a 10-year low. Collectively, auto-loan originations in those two categories dropped 8.6 percent in the first quarter.

“It does appear the industry is policing itself a little bit more,” said Melinda Zabritski, Experian senior director of financial solutions. “We started to see delinquencies go up, and lenders really seemed to respond especially in Q1 of this year by tightening up a little bit.”

The pullback in loans to those with credit scores under 600 echoes reports from auto dealers about lenders tightening credit standards.

In its monthly dealer survey, UBS found almost a third of the dealers questioned reported tighter credit standards, the highest level measured in the survey since 2009.

Despite the slowdown in new loans to subprime and deep subprime borrowers, those with the poorest credit ratings still owe more than $213 billion on the vehicles they’re driving, just under 20 percent of the $1.08 trillion owed on open auto loans.

Last week, Federal Reserve Governor Lael Brainard warned about the potential for more subprime auto loan defaults.

“Underwriting appears to be quite lax last year in subprime auto lending,” said Brainard. “Delinquencies rates suggest some borrowers are struggling to keep up with payments.”

The latest data from Experian supports Brainard’s point. In the first quarter, the 60-day delinquency rate jumped almost 10 percent, according to Experian. By comparison, the 30-day delinquency rate fell 6 percent.

Still, with fewer than 1 percent of all auto loans being two months delinquent, Zabritski believes warnings about a subprime bubble suddenly popping are overstated.

“I don’t believe we are in a catastrophic state,” she said. “Everyone always talks about lenders having short memories and forgetting from the past, but again we really started to see that pullback and it just really continued into the first quarter.”

Subprime auto loans

The Mortgage Lender Implode-O-Meter – tracking the housing finance breakdown, related to Alt-A and subprime mortgages, lending fraud, predatory lending, housing bubble, mortgage banking, foreclosures, debt, consolidation, lawyers, class-action lawsuits, subprime auto lenders.#Subprime #auto #lenders


Housing Economic Crisis News Picks

  • Irish Border Throws Unexpected Hurdle Into Brexit Talks – [2017-11-10]
  • White Plains CPA Sentenced To 22 Months In The Big House – [2017-11-10]
  • Suffolk County Attorney Indicted For Money Laundering – [2017-11-10]
  • Madoff victims set to receive $772 million payout – [2017-11-09]
  • Equifax profit falls as hacking costs take toll – [2017-11-09]
  • Macy’s Gains On Cost-Cuts As Peers Ail – [2017-11-09]
  • Foreclosed $51 Million “Billionaire’s Row” Penthouse Sells At A 30% Discount – [2017-11-09]
  • Wall St. retreats on worries over delays in tax-cut plan – [2017-11-09]
  • Dissecting the “$250 Billion” China Deals Trump Got for U.S. – [2017-11-09]
  • Bitcoin Fork Called Off: Prices Soar After SegWit2X Fails – [2017-11-09]

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ML-Implode.com was created in late 2006 to raise the alarm about the then-burgeoning implosion of the historically-epic housing and economic bubble. Started as a modest web page created by founder Aaron Krowne, this objective was achieved by, uniquely, tracking the in-progress implosion of independent mortgage lending companies then being ignored by a mainstream media in denial of even the existence of the housing bubble. At that time, you were more likely to hear a partyline of “housing always goes up” and juvenile jeers of “bubbles are for bathtubs” from TV’s talking heads, than of even slight concern about a clearly-overextended, already-frozen housing market.

Operated as a broadly-open community forum, ML-Implode quickly took the lead in news about the mortgage implosion and subprime crisis, as industry professionals flocked to the site to share and find out the latest. The site even became, in part, a whistleblower platform, fighting (and winning) half a dozen lawsuits to defend the right of its contributors to post about corruption and malfeasance in financial companies, and be able to do so confidentially.

Despite its initial incarnation being rendered insolvent by these frivolous legal attacks, ML-Implode continues today in a stripped-down, lean-and-mean embodiment, remaining dedicated to tracking the fallout of the 2007-2008 credit crisis. This mission includes keeping tabs on recession/depressionary conditions, the policy response to the economic downturn and continued financial instability, the Fed and other global central bank interventions (including “ZIRP” and quantitative easing), actions and reforms of the monetary authorities, market manipulation (official and private sector), all global geopolitical conflict with economic roots, the evolution of the banking and monetary system (including dollar-alternative “reserve currencies”, gold, silver, and bitcoin and other “virtual currencies”), the effect of the economic turmoil on society, basic themes of economic fairness and justice, and much more.

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Subprime auto lenders

Auto Industry Benefits For Now From Subprime Loans: NPR, subprime auto loans.#Subprime #auto #loans


Auto Industry Benefits For Now From Subprime Loans

Subprime auto loans

A factor in the auto industry’s record sales the past 2 years has been the return of loans to borrowers with less than perfect credit. This has led some to worry about a bubble in subprime auto loans.

RACHEL MARTIN, HOST:

Subprime lending is back. We’re not talking about homes this time. Automakers and banks have been extending more credit to those with less than perfect credit scores, and that has some worried about a subprime car bubble. Here’s NPR’s Sonari Glinton.

SONARI GLINTON, BYLINE: As much as I love late-night talk shows, I know that as a reporter, whenever a late-night comedian sets his or her sights on my beat – cars and the economy – I’m going to have a lot of explaining to do. Here’s John Oliver talking about car loans on HBO’s “Last Week Tonight.” Remember, it’s HBO, so there will be bleeps.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN OLIVER: And this feeding frenzy over subprime customers now includes big lenders, like Santander and GM Financial. They have both expanded their subprime auto financing. And you might be wondering, why the [expletive] is everyone in such a hurry to lend money to people with bad credit? I mean, sure.

GLINTON: To help answer Mr. Oliver’s question, we turn to.

LACEY PLACHE: OK, hi. I’m Lacey Plache, chief economist at edmunds.com.

GLINTON: Chief economist – is that a promotion?

PLACHE: No, I’ve always been the chief economist.

GLINTON: Economist, not comedian, Plache says. The reason why the industry is looking to sell cars to people with less than stellar credit is, well, because jobs.

PLACHE: There are definite benefits to having access to credit, especially for an automobile because that really gives people a lot more options in terms of work.

GLINTON: For many millions of Americans, the only way to get to work is to drive yourself there. Plache says during the economic collapse, access to credit dried up, and that hurt people with poor credit scores. Poor credit means below 650. Now, you could easily fall into that category if you miss a few credit card payments. As the banks and the car companies extend credit to a wider range of people, they’re going to take on more risk.

PLACHE: You are going to see higher delinquency rates, higher defaults than you did during the days where the auto lenders were really focusing the majority of their efforts on super-prime and prime. And, you know, I think there’s some love of drama, right? Some people like to worry, and, you know, this is something to point to.

GLINTON: Now, comparisons between the credit market for cars and real estate are difficult because the car market is one-tenth as large.

ALEC GUTIERREZ: I wouldn’t say that the sky is falling, but I think it is fair to say that there has been an expansion in subprime lending overall. And that’s true of both new car purchases, used car purchases and leasing.

GLINTON: Alec Gutierrez is senior analyst with Kelley Blue Book. He points out that the risks for lenders are lower for autos than for real estate. And cars are easier to repossess, and that’s one reason consumers often pay their car loan first. It’s also a way for consumers to establish credit.

GUTIERREZ: You still have a lot of people that are rebuilding credit that have gone through foreclosures and, thus, have poor credit. These people still need a way to get to work, to get around town. Their vehicles – they age. They get old. They need to be replaced. And thus, you’ve got this continuous stream of subprime borrowers just looking for a way to get into a car.

GLINTON: Gutierrez says subprime auto lending boomed before the financial crisis, then plummeted with the financial collapse and is now beginning to get back to normal. He says the industry isn’t taking great risks, but some borrowers will be hurt.

GUTIERREZ: It’s devastating at a personal level when you can’t make those payments. You lose your car. You can’t go to work. You can’t pay the bills. But in terms of it being a systemic risk to the entire auto industry or the economy as a whole, it just doesn’t carry the same sort of weight and magnitude as the mortgage industry did, especially the way it was structured back in 2008.

GLINTON: Gutierrez says buyers need to shop around – go directly to the banks, credit unions before you go to the dealership. And if you’re in the car market, you always have options, even if your credit has taken a hit. Sonari Glinton, NPR News.

(SOUNDBITE OF KORESMA’S, “THE THEORY”)

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Deep’ Subprime Car Loans Hit Crisis-Era Milestone, subprime auto loans.#Subprime #auto #loans


‘Deep’ Subprime Car Loans Hit Crisis-Era Milestone

Amid all the reflection on the 10-year anniversary of the start of the subprime loan crisis, here s a throwback that investors could probably do without.

There s a section of the auto-loan market — known in industry parlance as deep subprime — where delinquency rates have ticked up to levels last seen in 2007, according to data compiled by credit reporting bureau Equifax.

Performance of recent deep subprime vintages is awful, Equifax said in a slide show on second-quarter credit trends.

Subprime auto loans

Analysts have been warning for years that subprime car loans pose a threat to lenders as delinquency rates have edged higher since reaching a post-recession low in 2012. But it wasn t until last quarter that the least creditworthy borrowers started to show the kinds of late payment profiles that accompanied the start of the financial crisis.

We re seeing an increase in delinquencies across all credit scores, but in the highest credit quality, it s just a basis point or two, Chief Economist Amy Crews Cutts said in an email Tuesday. In deep subprime, the rise is more substantial. What stood out to me was the issuers. Those that have been doing this for a decade or more were showing the better performance, while those that were relative newcomers were in the worse category.

The reason for the increase, she posited, is that lenders have loosened underwriting requirements as more firms tap into a declining market for car loans, not that there are more customers with worsening credit profiles.

It isn t a case of chasing a larger subprime share, Cutts said in an email Tuesday. There s been almost no change in median credit scores. That means they are letting other underwriting characteristics slide, she said, referring to the lenders that issue the bulk of subprime loans — so-called monolines that specialize in one area of the credit market and dealer-finance companies that work specifically with car sellers.

Subprime auto loans

Cutts said Equifax data show that lenders are extending repayment periods and offering longer terms, with many starting to exceed seven years. There may also be loosening by all lenders on factors that I cannot evaluate in my data, she said, citing downpayment requirements, lack of third party validation of income and employment.

That s not to say a repeat of the financial crisis is nigh. There might not even be cause for major concern over the auto loan market, Cutts said. Monolines and dealer-finance lenders accounted for just 4 percent of new originations in the second quarter. And the overall market is shrinking — there were 7.96 million loans in the first half of 2017, down 3.9 percent from a year ago. Just 1.94 million of those were subprime, a 12 percent drop.

Meanwhile, the overall rate of late payments exceeding 60 days on all types of auto loans came in at a still-healthy 0.91 percent, up just eight basis points from last year. The rate on prime loans was at 0.33 percent, an increase of three basis points.

Risk in auto lending is actually very balanced, Cutts said. More than 90 percent of overall auto loans are made by banks, credit unions, and captive auto finance companies, and these entities have become increasingly conservative and discerning in their underwriting.

Still, the rapid rise in deep subprime delinquencies should not go unnoticed, Cutts said.

As soon as lenders (and the investors behind them) get overconfident that they have better models and can make excess profits by disrespecting credit risk, they always get their hats handed to them sooner or later, Cutts said. The mortgage market learned this lesson at the expense of the entire global financial system, and it is playing out now in a micro-level, in the ABS market for subprime auto loans.

Watch Next: Why Subprime Auto Loans May Be the Next Big Short

Subprime auto loans

Subprime auto loans

Connects Interested Auto Buyers with Local Auto Dealers Regardless of Credit Type, subprime auto loans.#Subprime #auto #loans


subprime auto loans

BarNone was founded in 1995 for the purpose of helping the millions of working people who, because of credit discrepancies, are not able to obtain auto loans to purchase a quality vehicle in a “conventional” manner. BarNone has offices in Michigan and California and maintains a 24-hour call center.

When you’re looking for an auto loan, it pays to shop around. BarNone helps you compare auto loan rates and loan terms from multiple lenders. Compare different types of automobile loans, including new car loans, used car loans, and refinancing options, whether you’re buying from a dealer, or a private seller.

At BarNone it doesn’t matter if you’re someone who is interested in getting a traditional auto loan or if you desire to lease a car from a local dealership, we will help you pick the best solution no matter what your credit scores look like.

Take a moment and fill out our quick application, and after it is completed one of our financing experts will contact you.

Subprime auto loans

Rita B, Testimonials

“With great skepticism, I connected to your website, pre-convinced that it would be “just like the rest,”a lot of hype but no bite. I was terribly mistaken. It is obvious from your professionally done website that you are “true blue”for your prospective car-buying customers.”

Subprime auto loans

Subprime auto loans

Norman N, Testimonials

“I just wanted to let you guys know what a great service you have. I contacted you guys yesterday, and then was contacted by a dealership, and was approved within the hour. Today I’m driving a new car. Once again thank you so much; keep up the good work! “

Subprime auto loans

Subprime auto loans

Maria H, Testimonials

“Just wanted to say thanks for helping me get a car! You referred me to a dealer in my area who helped me finance the car I wanted when no one else would even talk to me! You guys are the best!”

Subprime auto loans

Subprime auto loans

Bob J, Testimonials

“I was very skeptical of the advertisement I received. I went to the dealer listed & I was totally amazed! We found the exact minivan we have been wanting & needing. We were treated better than we had ever been in ANY retail environment. I’ve been applauding & telling all of my friends/co-workers about BARNONE!”

Subprime auto loans

Auto Loan Surge Fuels Fears Of Another Subprime Crisis: NPR #cars #for #sale #by #owner


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Listen to the Story

Auto dealers are extending loans to a growing number of people with weak credit.

Joe Raedle/Getty Images

The number of Americans buying autos approached a record high last year. It’s one more sign of how much the economy is improving.

But there’s a big potential downside that’s evoking comparisons to the subprime mortgage boom. Auto dealers are extending loans to a growing number of people with weak credit, and more of them are having trouble making payments.

When Chris Westervelt moved from Texas to Alaska to take a job, he decided to trade in his Mazda for a car that could handle snow and ice.

“I started looking at vehicles that had four-wheel drive capabilities and I ended up settling on a Jeep Wrangler,” Westervelt says.

He went to a dealer and test drove a car. “They said, ‘Go ahead and take the Jeep home, you know, come back sometime tomorrow and, you know, we’ll get everything settled,’ ” Westervelt says. “So, after driving around a little and coming back, the store manager actually got a little aggressive with me. He’s like, ‘You’ve already put 200 miles on my Jeep. What am I going to do? I can’t resell this,’ ” Westervelt says.

5 steps to trim a subprime car loan rate #chilton #auto #repair


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5 steps to trim a subprime car loan rate

Highlights

  • A subprime car loan is for a buyer with a low credit score.
  • A consumer has the right to dispute any information on a credit report.
  • A down payment of 20 percent will improve your profile with a lender.

Despite the stigma of the word “subprime” when it’s attached to any kind of loan, subprime car loans are on the upswing as a share of overall auto financing. says Melinda Zabritski, director of automotive credit at the credit reporting bureau Experian.

A subprime car loan is for a buyer with a low credit score and a spotty credit history. As a percentage of total automotive financing, such loans represented almost 20 percent of all new-vehicle financing in 2010 from almost 17 percent in 2009, according to Experian. For Experian, a credit score of 670 or lower is considered subprime.

Steven Bowman, chief credit and risk officer at GM Financial, the financing arm for General Motors, says there isn’t much a consumer can do to significantly raise a credit score while negotiating with a dealer’s financing manager.

“It’s (done) over time and not a quick process,” he says.

Still, there are steps you can take in the short term to increase your chances of snagging financing and perhaps lowering the cost of a subprime car loan, even as you confront a lousy credit history.

Obtain your credit score

A key factor in determining creditworthiness and establishing a rate, your credit score is a snapshot of your credit status. Good or bad, it is information you should have before you go car shopping because even for consumers with good credit, their credit score can influence their rate.

You can obtain your credit score through any number of online sites. Some sources offer your score for free as a come-on for other consumer-finance services and others charge a small fee, usually $10 or less. The three national credit reporting bureaus — Experian, TransUnion and Equifax — provide credit scores and are a good place to begin your search.

Aquire your credit report

A credit score and credit report are two different pieces of evidence a creditor will scrutinize when considering a financing application. If your credit score is a snapshot of your creditworthiness, your credit report is its history.

Credit bureaus report the information creditors provide, which isn’t always correct. A consumer has the right to dispute any piece of information appearing on a credit report and should challenge anything that is incorrect. This is particularly true for someone seeking a subprime car loan and who needs to reduce the negative information on his or her credit report.

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Moreover, each credit bureau issues its own report and these may differ from one another. Rod Griffin, Experian’s director of public education, suggests obtaining your report in advance of applying for financing to give yourself time to dispute any inaccuracies.

Once you know your credit situation, you can begin to look for ways to improve it. “You need to know exactly what your credit report says,” he says.

Subprime Auto Loans Help Fuel Auto Sales Boom – ABC News #auto #part


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ABC News

Auto sales are booming with a strong pick-up in demand for light trucks and SUVs.

“September was another strong month,” said Karl Brauer, senior analyst at Kelley Blue Book. “The market continues to embrace trucks and SUVs at every price point, with premium brands also benefitting from a combination of fresh product and readily-available credit.”

Financing is cheap and much more widely available than right after the 2008 financial crisis, “with a significant extension of subprime lending,” said Mark Strand at AutoTrader.com. “These tailwinds have created an environment in which all the pent up demand we have talked about can be released.”

Government prosecutors are looking into liar loans, where borrowers’ incomes are inflated to enable them to qualify for high interest auto loans.

“Federal and state authorities, a group that includes prosecutors in New York, Alabama and Texas, are zeroing in on the most powerful, and arguably the least regulated, rung of the subprime auto loan chain, used-car dealerships, according to people briefed on the investigations,” reported The New York Times. “Already, they have found hundreds of fraudulent loans that together total millions of dollars.”

Money Flows Out After ‘Bond King’ Leaves

Record amounts of cash followed “bond king” Bill Gross out the door. Investors pulled $23.5 billion from Pimco’s flagship, Total Return bond fund, after he abruptly left the company last month. The fund lost more than 10 percent of its asserts after Gross departed for rival Janus Capital. The fund also lost money before Gross quit, and Pimco has been trying to calm investors.

“The fund is well positioned to meet potential redemptions, and short-term cash management is an area of expertise and strength at Pimco,” the company said in a statement.

Some of the money that flowed out of Pimco went to rivals Vanguard, Janus and DoubleLine funds. The big movements are example of the hazards of hiring and keeping star fund managers who have a big following.

Pensions: Just Like Other Debts?

A federal judge has struck a blow against the sanctity of public pensions in California by ruling that U.S. bankruptcy law permits the city of Stockton, California, to treat pension fund obligations like other debts, allowing the city to cut benefits.

Stockton argued that it must make its pension contributions for public employees before its creditors are paid the entire amount they are owned.

The case was being closely watched because it could help clarify who gets paid first by financially strapped cities.

Detroit Bankruptcy

Emergency manager Kevyn Orr is due back on the witness stand in Detroit’s multibillion-dollar bankruptcy trial. Testimony is scheduled to resume this morning before federal Judge Steven Rhodes.

A lawyer for the city questioned Orr on Wednesday on the physical condition of the city and its finances when he was hired by the state last year.

Orr has described Detroit as a cash-strapped city with blighted neighborhoods, service delivery problems, old equipment and tons of debt.

Facebook Apologizes

Facebook is apologizing to the LGBT community for a recent crackdown that resulted in the suspension of a number of profiles.

Facebook’s VP of product made a statement on the site, saying a single user flagged a number of pages for using fake names. Facebook then suspended the accounts without realizing why they were using fake names.

Facebook apologized to the “affected community of drag queens, drag kings, transgender, and extensive community of our friends, neighbors, and members of the LGBT community.”

Members of the Facebook team met with members of the LGBT community Wednesday and promised “more deliberate customer service” in the future.

The Top 25 Subprime Lenders #classic #auto


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The Top 25 Subprime Lenders

Here are the top 25 subprime loan issuers and the amounts of loans issued from 2005 through 2007, according to an analysis of 7.2 million “high interest” loans released on May 6 by the Washington-based Center for Public Integrity. The lenders made $997.5 billion in such loans during the period, according to the group.

1. Countrywide Financial

At least $97.2 billion

2. Ameriquest Mortgage/ACC Capital Holdings

At least $80.6 billion

3. New Century Financial

At least $75.9 billion

4. First Franklin/National City/Merrill Lynch

At least $68 billion

5. Long Beach Mortgage/Washington Mutual

At least $65.2 billion

6. Option One Mortgage/H R Block

At least $64.7 billion

7. Fremont Investment Loan/Fremont General

At least $61.7 billion

8. Wells Fargo Financial/Wells Fargo

At least $51.8 billion

9. HSBC Finance/HSBC Holdings

13. Accredited Home Lenders/Lone Star Funds V

At least $29.0 billion

14. IndyMac Bancorp

At least $26.4 billion

15. CitiFinancial/Citigroup

At least $26.3 billion

16. EquiFirst/Regions Financial/Barclays Bank

At least $24.4 billion

At least $17.6 billion

22. American Home Mortgage Investment

Subprime Loans Are Boosting Car Sales #auto #loans #calculator


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Subprime Loans Are Boosting Car Sales

A woman came into Alan Helfman’s showroom in Houston in October looking to buy a car for her daily commute. Even though her credit score was below 500, in the bottom eighth percentile, she drove away with a new Dodge Dart. A year ago, “I would’ve told her don’t even bother coming in,” says Helfman, who owns River Oaks Chrysler Jeep Dodge Ram, where sales rose about 20 percent this year. “But she had a good job, so I told her to bring a phone bill, a light bill, your last couple of paycheck stubs, and bring me some down payment.”

As the fifth anniversary of the Federal Reserve’s policy of keeping interest rates near zero approaches, the market for subprime borrowing is again becoming frothy, this time in the car business instead of housing. U.S. auto sales, on pace for the best year since 2007, are increasingly being fueled by borrowers with spotty credit. They accounted for more than 27 percent of loans for new vehicles in the first half of the year, the highest proportion since Experian Automotive (EXPN:LN ) began tracking the data in 2007. That compares with 25 percent last year and 18 percent in 2009, as lenders pulled back during the recession. “Perhaps more than any other factor, easing credit has been the key to the U.S. auto recovery,” Adam Jonas, an analyst with Morgan Stanley (MS ). wrote in an October note to investors.

The money for subprime loans comes from yield-starved investors who buy bonds backed by them. Issuance of such bonds, which pay higher rates than U.S. government debt, soared to $17.2 billion this year, more than double the amount sold during the same period in 2010, but still below the peak of about $20 billion in 2005, according to Harris Trifon, an analyst at Deutsche Bank (DB ) .

The interest rates on subprime auto loans can climb to 19 percent, according to Standard Poor’s (MHFI ). “Right now, you have to have fairly bad credit to be paying above 3 percent,” says Jessica Caldwell, an analyst with auto research firm Edmunds.com. Chrysler Group (F:IM ) has been a beneficiary of the subprime boom. Fifty-eight percent of loans taken out to purchase its Dodge brand vehicles in October were above an annual percentage rate of 4.2 percent, the industry average, according to Edmunds. The average loan for a Dodge charged an APR of 7.4 percent, and 23 percent of the loans had APRs of more than 10 percent, making Dodge the brand with the highest percentage of loans at more than 10 percent, followed closely by Chrysler and Mitsubishi (7211:JP ). Dodge’s U.S. sales rose 17 percent this year through October compared with a year earlier, propelling Chrysler Group to 43 straight months of rising sales.

About 13 issuers have raised money in the asset-backed bond market to make subprime auto loans this year, according to Citigroup (C ). Among them are GM Financial, the lender known as AmeriCredit before it was acquired by General Motors (GM ) in 2010, and new entrants such as Exeter Finance, owned by Blackstone Group (BX ). Exeter has issued $900 million of bonds linked to subprime auto loans this year, data compiled by Bloomberg show. Exeter has higher loss rates compared with other lenders, S P said in a Sept. 17 report. A spokeswoman for Exeter declined to comment.

Shoddy home loans packaged into bonds by Wall Street banks fueled the financial crisis. Subprime auto loans are a good investment, Helfman says: “A person that has to get from point A to point B, they’re not going to jeopardize their job. They have to pay the car payment before they pay anything else.” His Dodge Dart customer with the bad credit had to pay a higher-than-average interest rate on her loan. “It wasn’t pretty, but it wasn’t crazy,” he says. She was “so happy she couldn’t see straight.”

Subprime Auto Lending: How the Gov – t Can Stop a New Financial Crisis #online #auto #parts #store


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The Next Subprime Crisis Will Ride on Four Wheels—Unless the Government Stops It

Having failed to act on the subprime mortgage crisis, federal regulators now have a shot at redemption. This week, a top official at the Justice Department vowed to fully investigate subprime auto lending, which has in recent years become a major way to make a buck by targeting low-income communities.

Subprime auto loans don’t represent an existential threat to the U.S. economy: With $21.8 billion in subprime securitizations last year, the market is roughly 1/50 th the size of mortgage-backed securities at the height of the bubble. But low-income borrowers are still being swindled by unscrupulous dealers, or forced into giving up their cars because of a loan they could never afford. And though auto dealers, active in every local community, carry tremendous political power, nobody in this industry is too big to jail. If law enforcement cannot take down small-time frauds, there’s no hope for the big ones.

The proliferation of subprime auto loans results from two post-financial crisis factors. First, investors lost interest in mortgage-backed securities, but still sought out investments with enough risk to bring decent yields. So they migrated to subprime auto securities. The market has grown every year since 2009.

The second boost for subprime auto lending was the auto dealer carve-out from Consumer Financial Protection Bureau oversight in the 2010 Dodd-Frank Act. Former Congressman John Campbell, a former car dealer who received $7 million a year from renting out six dealerships and one repair shop while in office, pushed through the giveaway. Like escaped prisoners running away from a klieg light, financiers moved into the one market where regulators weren’t allowed to look.

The Federal Trade Commission has primary jurisdiction over auto dealers. “Historically they have not taken an aggressive approach,” said Chris Kukla of the Center for Responsible Lending. The CFPB, meanwhile, has jurisdiction over the financial companies buying the loans, while the Securities and Exchange Commission regulates the securitizations and the prudential banking regulators also monitor some of the key players. This allows the industry to play regulators off one another for maximum leniency. “It’s hard enough to convince one regulator of the problem,” said Kukla. “It’s good that you have lots of cops on the beat, but the bifurcation can be problematic.”

These factors have super-charged the market. Subprime customers took out $129.5 billion in auto loans in the first eleven months of 2014, over one-quarter of total auto sales, according to credit-reporting bureau Equifax. And just like in the subprime mortgage days, increased investor appetite has pressured financiers and dealers to weaken underwriting standards. Regulators are probing numerous instances of falsified loan applications and inflated incomes.

Just as troubling are the ways dealers gouge borrowers that may be more unethical than illegal. The average term on a subprime auto loan is now 66 months, according to CRL’s Chris Kukla. Dealers stretch out the terms to make the monthly payment look smaller, but over time the borrower pays more. They also make a lot of money selling add-ons like extended warranties and service contracts, some of which have questionable value. Subprime borrowers often trade in cars worth less than they owe, rolling the debt onto the back of the new loan in an eerie recall of the bubble-era mortgage refinancing boom. Interest rates can be as high as 30 percent in some states, even though lenders can repossess the car if the borrower defaults. And defaults are rising: Missed payments on car loans are at a post-financial crisis high. according to Moody’s Analytics.

Increased defaults make sense when you consider the layers of risk placed on borrowers. The average loan-to-value ratio on a subprime car loan is as high as 150 percent. Buyers are deeply “underwater” on their loan the moment they drive off the lot. And that’s before auto dealers charge their “dealer markup,” points on the interest rate dealers add as compensation for matching the borrower and lender. Dealers often shop for financial institutions that allow them to issue the biggest markup. When borrowers are told the final interest rate, they have no idea how much of that goes to the dealer as pure profit.

These dealer markups disproportionately affect people of color. Studies show that African-Americans and Hispanics pay higher interest rates than white people, even when they try to negotiate the loan. “People of color who tried to negotiate got worse interest rates than whites who didn’t,” said Kukla.

The Justice Department is probing this raw material to bring cases, which fall into two parallel categories. First, as JPMorgan Chase has admitted in regulatory filings, they are in discussions with Justice over racial disparities on their dealer markups. The investigation grew out of a CFPB partnership. enforcing the Equal Credit Opportunity Act. Ally Bank has already paid $98 million in fines over the same practices, and both Honda and Toyota’s financing arms have acknowledged their potential exposure.

But Sally Quillian Yates, acting number two at the Justice Department, named a variety of other potential offenses in her speech to the National Association of Attorneys General on Tuesday. She included securities fraud, origination fraud and deceptive consumer practices. That could include faking borrower incomes, knowingly making false promises to investors about the quality of subprime auto loan securitizations, or selling worthless warranties to customers. Several companies, like Ally Financial and Santander Consumer USA. have already received subpoenas for information on underwriting and securitization.

Kukla credits aggressive media investigations of subprime auto loans, including an ongoing New York Times series. for finally calling attention to the industry’s problems. It could spur additional regulations to weed out still-legal practices, like usurious interest rates, excessive loan terms or “starter interrupts,” where lenders can shut off delinquent borrowers’ vehicles remotely. without any due process affirming the default. “There’s a severe lack of regulation in auto lending,” Kukla said. “The good result here is that people are starting to pay attention.”

Will these federal investigations yield results? The Justice Department has been criticized repeatedly for its inability to prosecute individuals responsible for the financial crisis. But the auto lending space seems like a classic environment for flipping the smaller players (the loan officers/brokers) to get to the decision-makers at the top (the dealers/lender executives). The industry will whine about preventing access to credit, but preventing fraudulent conduct is actually federal prosecutors’ job description. In a relatively small market, without the threat of extreme collateral consequences for cracking down, DOJ should have the freedom to go wherever the investigations take them.

Early signs have not been promising. That settlement with Ally Financial over dealer markup discrimination implicated no individuals, and Ally didn’t have to admit to wrongdoing. In these investigations, the government appears to be using a statute, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which has a lower burden of proof but only allows for civil and not criminal penalties. In her speech Tuesday, Yates stressed that financial penalties are “not a substitute for holding individuals within those institutions personally accountable for their actions.” But talk is cheap.

Without an aggressive push on auto lending fraud, the Justice Department will signal that it is just as unserious as it was about mortgages, content to impose one-off financial settlements that do nothing to deter misconduct. As Sally Yates said this week, “We shouldn’t wait until there is a crisis to pay attention.”

Subprime Auto Lenders #queens #auto #mall


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Subprime Auto Loans and Lenders

Need a car? Has your credit seen better days? Then you will probably need to find subprime auto lenders willing to accept your credit. Fortunately, we specialize in connecting auto loan applicants to lenders who work with subprime credit. By partnering with subprime auto loan lenders all across the nation, we maximize your chances of getting approved. When you apply online, our sophisticated system places your application with the best lender for your personalized needs. Matching criteria include:

  • Your Location
  • Your Credit Score
  • Your Down Payment
  • Your Debt-to-Income Ratio

Ready to get started? Click here to apply online .

What is Subprime Auto Financing?

For starters, let s talk about credit scores. They fall in a range of 300 to 800. The average credit score in the United States is about 680. Credit scores of 620 to 679 are generally classified as subprime. This is simply means it falls below the prime credit range of 680 to 720. Additionally, credit scores of lower than 620 may also be categorized subprime, deep subprime, or simply bad. Typically, a person who need a subprime auto loan has issues on their credit record such as:

  • Limited Credit History
  • Delinquent or Unpaid Debts or Bills
  • Limited Collateral to Secure the Loan
  • High Amount of Existing Debt in Relation to Income

Most banks and captive auto finance companies will be hesitant to approve auto loans for people with subprime credit. After all, they want to make sure that the candidate is likely to pay down their car loan. If their credit report seems to indicate otherwise, then they become a risky investment for the auto lender.

However, reports now indicate that about 40% of Americans have subprime credit. For this reason, subprime auto lenders have become a popular alternative to traditional banks. They cater to people with less-than-perfect credit.

Subprime Auto Loans Outstanding #auto #search


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Subprime Auto Loans Won’t Wreck The Financial System

aldenjewell / Flickr

The word “subprime” sends chills down the spines of anyone who lost money during the financial crisis.

A couple years ago, mortgage loans to subprime borrowers – those are the people with the worst credit scores – helped churn housing market activity, which drove up home prices and perpetuated a mortgage-fueled credit bubble. That bubble eventually burst causing the credit markets to seize up. And when the credit markets seized up, even healthy businesses were unable to secure needed financing. Recession ensued, jobs were lost, and the government bailouts came to the rescue.

Well, the rise in subprime loans have been cited as explaining some of the marginal growth in auto sales. And the high interest costs seem to be a source of grief for borrowers .

However, economists seem to agree broadly that the next financial crisis will not be caused by subprime auto loans.

“While the word “subprime” often raises eyebrows these days, the auto market is notably different from housing,” Bank of America Merrill Lynch’s Michael Hanson said in an October note to clients.

Citing household debt data from the New York Fed. Hanson highlighted the fact that auto loans as a whole is just a fraction of the size of the mortgage debt out there.  Through Q3 of this year, auto loans represented just 8% of the $11.71 trillion of total household debt outstanding. Mortgages represented 69%.

NY Fed

And of that, around 20% represent subprime auto loans. This share has been relatively steady for years.

Deutsche Bank

Taken together, we can see that subprime auto loans represent a small part of what is already a small part of the debt out there.

Still not convinced?

Keep in mind that a car is not a house. There are a mountain of differences that separate the two. Hanson explains (emphasis ours):

. The fact that vehicles are much easier to repossess than, say, houses are to foreclose makes the systemic risks from an over- extension of subprime auto lending much smaller than what was seen during the fallout from subprime lending during the housing crisis . Autos are much more liquid than houses. particularly now when the auto sector is strong whereas housing is still in the midst of a gradual recovery. And since most of the subprime lending is for used cars that have already depreciated, the lender faces less risk of having to sell the recovered asset at a substantially lower price — another important difference versus the housing market, where foreclosed properties often would only sell at significant discounts.

Not only is the subprime auto market rather different than the subprime housing market from the lender’s side, but the borrower’s situation is also different. Outside of a very small share of the market, car buyers are not speculating on price or expecting their asset to appreciate significantly in value. Cars are understood by both lender and borrower to be depreciating assets, and loan terms are set accordingly. Borrowers also aren’t typically leveraging their cars to finance other consumption. although it is not all that uncommon for loan-to-value ratios in the auto loan sector to exceed 100%. That can happen if residual payments on a prior-owned vehicle are folded into the new loan, or if extras like insurance are added to the loan. The deeper into the subprime pool such practices extend, the greater the risks that a borrower will be unable to pay.

However, some studies have found that people are more likely to be current on their auto payments than either mortgages or credit card debt once they get into payment trouble. That observation likely reflects the greater ease with which cars can be repossessed and sold, and the importance of a car to maintain employment or education. For better or worse, people tend to prioritize auto loan payments — which makes a wave of defaults somewhat less likely.

According to the NY Fed’s latest quarterly report on household debt and credit, delinquencies on auto loans have been on the decline.

So, while subprime auto loans may be on the rises and we may hear of poor borrowers getting squeezed, we are not being pushed toward a financial crisis by these loans.

Now It s Subprime Auto Loans Under Scrutiny – ABC News #auto #advantage


#subprime auto loans
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ABC News

Federal prosecutors are looking into the booming business of subprime auto loans. The investigation raises questions about whether GM and other firms have been selling questionable auto-loan investments to investors. The recent rise in auto sales has been fueled largely by consumer lending. Subprime loans are often made to borrowers who have poor credit histories. GM Finance says it has received a subpoena from the Department of Justice for documents related to subprime auto loans made since 2007. The Justice Department is said to be considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed following the savings and loan crisis in the 1980s.

General Motors says it has made progress in fixing its recall website so that it correctly lists all the cars that need repairs. The company says it expects the site to be fully corrected this week. The government had said Friday that GM’s vehicle identification number look-up system has been incorrectly telling some owners that their cars aren’t being recalled. That happened when the cars’ parts weren’t available. But the government says all recalls should be listed.

Gannett is spinning off its publishing business from its broadcasting and digital operations. The company is also acquiring full ownership of Cars.com for $1.8 billion. The decision follows moves by Tribune, Time Warner and Rupert Murdoch’s News Corp in breaking off print media from their rapidly expanding broadcast operations. Gannett says the publishing business will basically be debt free once spun off, with the broadcasting and digital businesses holding the existing debt.

Sand is the new gold. Prices are going up as mining companies increase fracking at oil and natural gas sites. “Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground,” The Wall Street Journal says. During the fracking process, sand is mixed with water and chemicals. “Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made by energy-consulting firm PacWest Consulting Partners a year ago,” the Journal reports.

Standard & Poor’s rating agency says the rising wealth gap in the United States is complicating the rebound from the recession, and raising the risk of boom-and-bust cycles. S

Next subprime bubble to burst: auto loans #automobile


#subprime auto loans
#

MORE ON:

Subprime auto loans are on the rise and, just like subprime mortgages, are claiming untold victims.

Samuel Perez, 32, is still dealing with fallout from his experience with a subprime loan five years ago, he told The Post.

Officials at Woodside, Queens, dealership Auto Palace offered him an 8.49 percent interest rate on a BMW, with a teaser rate of 6 percent after six months. Perez worked out a financing deal that included monthly payments and trading in an Audi and rolling its payments into the new car.

The rate never made it down to 6 percent since the BMW didn’t work properly, so Perez returned it. But the dealer wouldn’t give him back the Audi, which it had not paid off, or release him from the debt on the BMW, even though he’d never received title.

Perez found himself scrambling to borrow a car to get to work — while fending off bills on two cars he didn’t have, or own, which hurt his already low credit score, he told The Post.

This situation is not limited to small lenders, either — large banks are jumping into the fray.

Just last week, Ally Financial’s new chief executive hit the accelerator into the roughly $300 billion market for subprime auto loans.

Jeffrey Brown said Ally, the biggest player in the auto lending market, wants to boost the amount of subprime auto lending to as much as 15 percent of all loans, as US automakers reported a nearly 14 percent sales jump in January for new cars over last year’s levels.

With interest rates that can at times exceed 20 percent, subprime auto loans are a risky but popular revenue stream for banks — and often a devastating move for consumers.

The marketplace in which auto loans are made to consumers with a credit score below 640 is so shady that multiple regulators, from New York Department of Financial Services head Benjamin Lawsky to Manhattan US Attorney Preet Bharara, are investigating possible abuses.

Regulators have requested documents from Ally and other major auto lenders Santander Consumer USA and GM Financial regarding securitization of subprime auto loans.

Perez turned to Brooklyn attorney Ahmad Keshavarz for help. Keshavarz filed a lawsuit against Auto Palace and two other defendants alleging a range of harms, including violations of the Fair Credit Reporting Act, breaches of warranty and violations of the Truth in Lending Act, according to court documents. Auto Palace could not be reached for comment.

The defendants settled, and Perez bought another car.

In 2012, the Queens County District Attorney’s Office charged Auto Palace and its owners with $730,000 in sales tax fraud, and its former finance manager with defrauding customers out of $115,000.

The owners pleaded guilty in 2013 and paid $150,000 to the New York Department of Taxation and Finance. The former finance manager pleaded guilty to grand larceny and was sentenced to two to four years in jail.

Civil cases are still pending against Auto Palace by the Consumer Affairs Department and Department of Motor Vehicles.

“I learned from my mistake,” says Perez.

There are many signs that the subprime auto loan market is reaching unsustainable levels. Delinquencies, average loan balances and loan terms are all increasing nationwide.

In New York, the share of subprime loans has grown to 18.6 percent of consumers from 14.2 percent in 2009, and average loan size is up 5 percent to $18,874, according to Equifax.

“Loans will start blowing up,” says Wolf Richter, Web publisher of wolfstreet.com.

Auto Loan Surge Fuels Fears Of Another Subprime Crisis: NPR #nada #auto


#subprime auto lenders
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Listen to the Story

Auto dealers are extending loans to a growing number of people with weak credit.

Joe Raedle/Getty Images

The number of Americans buying autos approached a record high last year. It’s one more sign of how much the economy is improving.

But there’s a big potential downside that’s evoking comparisons to the subprime mortgage boom. Auto dealers are extending loans to a growing number of people with weak credit, and more of them are having trouble making payments.

When Chris Westervelt moved from Texas to Alaska to take a job, he decided to trade in his Mazda for a car that could handle snow and ice.

“I started looking at vehicles that had four-wheel drive capabilities and I ended up settling on a Jeep Wrangler,” Westervelt says.

He went to a dealer and test drove a car. “They said, ‘Go ahead and take the Jeep home, you know, come back sometime tomorrow and, you know, we’ll get everything settled,’ ” Westervelt says. “So, after driving around a little and coming back, the store manager actually got a little aggressive with me. He’s like, ‘You’ve already put 200 miles on my Jeep. What am I going to do? I can’t resell this,’ ” Westervelt says.

Subprime Auto Loans Rates #used #car #lot


#subprime auto lenders
#

For the sub-prime car buyers of America, Rapid Car Loans brings incredible auto loan program. The company will provide quick approval and help you in improving your credit score with affordable loan quotes. Apply now.

Most lenders classify credit score of car buyers as prime and sub-prime. If your credit score is lower than 500, it is usually considered a sub-prime score. And, for such scores, you have to apply with a sub-prime lender.

A sub-prime lender has wide experience of handling sub-prime loan applications and he/she also understands your situation. So, it is always better to apply with him/her instead of a traditional bank because it will not accept your loan request.

Rapid Car Loans has a large network of lenders and dealers. It includes several sub-prime lenders who are ready to help you in fulfilling your car dream. They provide auto loans for people with bankruptcy, sub-prime credit score or zero credit history.

To get in touch with a reputed lender, apply with the company by submitting an online loan request.

The company will find you the best sub-prime lender that suits your needs and will help you in obtaining affordable car loans. This is your perfect chance of obtaining a car loan and improving your credit score. Apply now and get ready for a sub-prime car loan.

Now It s Subprime Auto Loans Under Scrutiny – ABC News #auto #seat


#subprime auto loans
#

ABC News

Federal prosecutors are looking into the booming business of subprime auto loans. The investigation raises questions about whether GM and other firms have been selling questionable auto-loan investments to investors. The recent rise in auto sales has been fueled largely by consumer lending. Subprime loans are often made to borrowers who have poor credit histories. GM Finance says it has received a subpoena from the Department of Justice for documents related to subprime auto loans made since 2007. The Justice Department is said to be considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed following the savings and loan crisis in the 1980s.

General Motors says it has made progress in fixing its recall website so that it correctly lists all the cars that need repairs. The company says it expects the site to be fully corrected this week. The government had said Friday that GM’s vehicle identification number look-up system has been incorrectly telling some owners that their cars aren’t being recalled. That happened when the cars’ parts weren’t available. But the government says all recalls should be listed.

Gannett is spinning off its publishing business from its broadcasting and digital operations. The company is also acquiring full ownership of Cars.com for $1.8 billion. The decision follows moves by Tribune, Time Warner and Rupert Murdoch’s News Corp in breaking off print media from their rapidly expanding broadcast operations. Gannett says the publishing business will basically be debt free once spun off, with the broadcasting and digital businesses holding the existing debt.

Sand is the new gold. Prices are going up as mining companies increase fracking at oil and natural gas sites. “Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground,” The Wall Street Journal says. During the fracking process, sand is mixed with water and chemicals. “Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made by energy-consulting firm PacWest Consulting Partners a year ago,” the Journal reports.

Standard & Poor’s rating agency says the rising wealth gap in the United States is complicating the rebound from the recession, and raising the risk of boom-and-bust cycles. S

GM Ramps Up Risky Subprime Auto Loans To Drive Sales; Taxpayers Still Own 26. 5%. #used #auto


#subprime auto loans
#

GM Ramps Up Risky Subprime Auto Loans To Drive Sales

President Obama has touted General Motors (GM ) as a successful example of his administration’s policies. Yet GM’s recovery is built, at least in part, on the increasing use of subprime loans.

The Obama administration in 2009 bailed out GM to the tune of $50 billion as it went into a managed bankruptcy.

Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit. Renamed GM Financial, it has played a significant role in GM’s growth .

The automaker is relying increasingly on subprime loans, 10-Q financial reports shows.

Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

Subprime Key Driver

GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012.

The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores below 540 shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion.

Prime loans, those above 660, dropped 42% to $676 million.

GM Financial provides just over 8% of GM’s financing. Prior to 2006, GM’s captive lending arm was GMAC, but GM sold a controlling stake in 2006. GMAC later renamed itself Ally Financial and continues to provide the bulk of GM’s financing.

At the peak of the credit crisis and recession in late 2008, Ally announced that it would move away from subprime lending.

By spring 2010 GM’s new management, led by North American executive Mark Reuss, wanted to move back into subprime, fearing that GM couldn’t compete.

Subprime lending in cars is not as risky as in housing. Car loans are cheaper, so customers have an easier time making payments. When they do go into default, the cars can be repossessed and sold to recover some of the loss.

“The subprime market grew as a result of the recession,” said GM spokesman Jim Cain. “Our experience, however, is that with proper management they are very good risks.”

He points to GM’s credit losses which have not risen above 5.5% since late 2010.

Nevertheless, since it acquired GM Financial, GM has seen its subprime loans grow from about 4.8% of sales in Q4 2010 to 8.2% in Q1 2012. The industry average is about 6%.

Subprime auto loans: boon or bane? #buchanan #auto #park


#subprime auto lenders
#

By Teddy Nykiel. Nerdwallet.com August 14, 2014

For consumers down on their luck with a checkered borrowing history and who need a car, subprime auto loans sound promising: they’re easy to get even for people who have a low credit score. are recovering from bankruptcy or lack a steady income.

Since they go to borrowers whose credit scores are often too low to qualify for a standard loan, these notes carry higher costs for consumers and greater risk for lenders. Subprime auto loans have become controversial recently as their increasing popularity has led to comparisons with the poor quality home mortgages that led to the 2007-2009 financial crisis and the recession that resulted. Here’s a look at how these loans work, what they can mean for consumers and how they could hurt the economy.

Subprime auto loans explained

Financial institutions give subprime auto loans to individuals with credit scores of 640 or under, according to Equifax. the credit reporting company. Because borrowers with poor credit are riskier for lenders, banks charge much higher interest rates, often in the 20% range, compared with less than 5% for those with good rankings. The difference can amount to hundreds of dollars a month, depending on the size of the debt.

Subprime lending accounts for about 32% of all car loans  made today and they have balances outstanding of $46 billion, an eight-year high, Equifax says. Partly, the increase is driven by market forces unrelated to consumer needs.

Next subprime bubble to burst: auto loans #auto #quote


#subprime auto loans
#

MORE ON:

Subprime auto loans are on the rise and, just like subprime mortgages, are claiming untold victims.

Samuel Perez, 32, is still dealing with fallout from his experience with a subprime loan five years ago, he told The Post.

Officials at Woodside, Queens, dealership Auto Palace offered him an 8.49 percent interest rate on a BMW, with a teaser rate of 6 percent after six months. Perez worked out a financing deal that included monthly payments and trading in an Audi and rolling its payments into the new car.

The rate never made it down to 6 percent since the BMW didn’t work properly, so Perez returned it. But the dealer wouldn’t give him back the Audi, which it had not paid off, or release him from the debt on the BMW, even though he’d never received title.

Perez found himself scrambling to borrow a car to get to work — while fending off bills on two cars he didn’t have, or own, which hurt his already low credit score, he told The Post.

This situation is not limited to small lenders, either — large banks are jumping into the fray.

Just last week, Ally Financial’s new chief executive hit the accelerator into the roughly $300 billion market for subprime auto loans.

Jeffrey Brown said Ally, the biggest player in the auto lending market, wants to boost the amount of subprime auto lending to as much as 15 percent of all loans, as US automakers reported a nearly 14 percent sales jump in January for new cars over last year’s levels.

With interest rates that can at times exceed 20 percent, subprime auto loans are a risky but popular revenue stream for banks — and often a devastating move for consumers.

The marketplace in which auto loans are made to consumers with a credit score below 640 is so shady that multiple regulators, from New York Department of Financial Services head Benjamin Lawsky to Manhattan US Attorney Preet Bharara, are investigating possible abuses.

Regulators have requested documents from Ally and other major auto lenders Santander Consumer USA and GM Financial regarding securitization of subprime auto loans.

Perez turned to Brooklyn attorney Ahmad Keshavarz for help. Keshavarz filed a lawsuit against Auto Palace and two other defendants alleging a range of harms, including violations of the Fair Credit Reporting Act, breaches of warranty and violations of the Truth in Lending Act, according to court documents. Auto Palace could not be reached for comment.

The defendants settled, and Perez bought another car.

In 2012, the Queens County District Attorney’s Office charged Auto Palace and its owners with $730,000 in sales tax fraud, and its former finance manager with defrauding customers out of $115,000.

The owners pleaded guilty in 2013 and paid $150,000 to the New York Department of Taxation and Finance. The former finance manager pleaded guilty to grand larceny and was sentenced to two to four years in jail.

Civil cases are still pending against Auto Palace by the Consumer Affairs Department and Department of Motor Vehicles.

“I learned from my mistake,” says Perez.

There are many signs that the subprime auto loan market is reaching unsustainable levels. Delinquencies, average loan balances and loan terms are all increasing nationwide.

In New York, the share of subprime loans has grown to 18.6 percent of consumers from 14.2 percent in 2009, and average loan size is up 5 percent to $18,874, according to Equifax.

“Loans will start blowing up,” says Wolf Richter, Web publisher of wolfstreet.com.

GM Ramps Up Risky Subprime Auto Loans To Drive Sales; Taxpayers Still Own 26. 5%. #mazda #auto #parts


#subprime auto loans
#

GM Ramps Up Risky Subprime Auto Loans To Drive Sales

President Obama has touted General Motors (GM ) as a successful example of his administration’s policies. Yet GM’s recovery is built, at least in part, on the increasing use of subprime loans.

The Obama administration in 2009 bailed out GM to the tune of $50 billion as it went into a managed bankruptcy.

Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit. Renamed GM Financial, it has played a significant role in GM’s growth .

The automaker is relying increasingly on subprime loans, 10-Q financial reports shows.

Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

Subprime Key Driver

GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012.

The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores below 540 shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion.

Prime loans, those above 660, dropped 42% to $676 million.

GM Financial provides just over 8% of GM’s financing. Prior to 2006, GM’s captive lending arm was GMAC, but GM sold a controlling stake in 2006. GMAC later renamed itself Ally Financial and continues to provide the bulk of GM’s financing.

At the peak of the credit crisis and recession in late 2008, Ally announced that it would move away from subprime lending.

By spring 2010 GM’s new management, led by North American executive Mark Reuss, wanted to move back into subprime, fearing that GM couldn’t compete.

Subprime lending in cars is not as risky as in housing. Car loans are cheaper, so customers have an easier time making payments. When they do go into default, the cars can be repossessed and sold to recover some of the loss.

“The subprime market grew as a result of the recession,” said GM spokesman Jim Cain. “Our experience, however, is that with proper management they are very good risks.”

He points to GM’s credit losses which have not risen above 5.5% since late 2010.

Nevertheless, since it acquired GM Financial, GM has seen its subprime loans grow from about 4.8% of sales in Q4 2010 to 8.2% in Q1 2012. The industry average is about 6%.

Subprime Car Loans Online #salinas #auto #mall


#subprime auto lenders
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Subprime Car Loans – How To

Although finding an auto lender who offers auto loans to men and women with bad credit is simple, it is important that you find a dealer that you can trust. For those who wish to buy a used or new car a dealer may offer a chance to take advantage of financing options. It is important that you choose a lender that will point out all of the options that you have. If you wish to take advantage of bad credit auto loans, the following steps will help make things easier.

Check Your Personal Credit Report

Before you begin to apply for subprime car loans, you need to ask for a copy of your personal credit report. Look at your credit report and remember your FICO score. You will need to know your credit score before you apply for different car loans. This is mainly because your auto lender will base his or her approval on your credit history and your credit score after you have submitted your application. There are many different auto lenders who will classify subprime borrowers as men and women who have a score that is below 640. However, other lenders may offer those with a score under 640 prime rates.

Compare Different Auto Loan Rates

Do not settle for the one of the first few car loans that you come across. It is important that you shop around first. Many lenders who offer subprime car loans qualify applicants with different rates. It may cost you more money if you do not shop around. You can visit different auto loan Web sites for more information. Request a no obligation quote that can tell you everything that you need to know about that particular car loan. Many quotes will include details such as your loan approval amount, your qualifying interest rate, your estimated monthly payment, and your loan term.

Boost Your Low Credit Score

There is no doubt that raising your low credit score before you try to obtain subprime car loans can save you money. However, this does not happen overnight. You need to stay vigilant and work hard at it. In fact, many lenders may approve your application if they notice that you are improving your credit habits. Before you apply for car loans, you should try to work on your credit score. You can do this by submitting regular payments to any of your creditors. You can also try to reduce your overall debt ratio. By paying off some of the debt that you owe you are showing that you can pay back your potential auto lender.

Subprime auto loans: boon or bane? #prestige #auto #traders


#subprime auto lenders
#

By Teddy Nykiel. Nerdwallet.com August 14, 2014

For consumers down on their luck with a checkered borrowing history and who need a car, subprime auto loans sound promising: they’re easy to get even for people who have a low credit score. are recovering from bankruptcy or lack a steady income.

Since they go to borrowers whose credit scores are often too low to qualify for a standard loan, these notes carry higher costs for consumers and greater risk for lenders. Subprime auto loans have become controversial recently as their increasing popularity has led to comparisons with the poor quality home mortgages that led to the 2007-2009 financial crisis and the recession that resulted. Here’s a look at how these loans work, what they can mean for consumers and how they could hurt the economy.

Subprime auto loans explained

Financial institutions give subprime auto loans to individuals with credit scores of 640 or under, according to Equifax. the credit reporting company. Because borrowers with poor credit are riskier for lenders, banks charge much higher interest rates, often in the 20% range, compared with less than 5% for those with good rankings. The difference can amount to hundreds of dollars a month, depending on the size of the debt.

Subprime lending accounts for about 32% of all car loans  made today and they have balances outstanding of $46 billion, an eight-year high, Equifax says. Partly, the increase is driven by market forces unrelated to consumer needs.

Subprime Auto Loans Rates #cheap #auto #body #parts


#subprime auto lenders
#

For the sub-prime car buyers of America, Rapid Car Loans brings incredible auto loan program. The company will provide quick approval and help you in improving your credit score with affordable loan quotes. Apply now.

Most lenders classify credit score of car buyers as prime and sub-prime. If your credit score is lower than 500, it is usually considered a sub-prime score. And, for such scores, you have to apply with a sub-prime lender.

A sub-prime lender has wide experience of handling sub-prime loan applications and he/she also understands your situation. So, it is always better to apply with him/her instead of a traditional bank because it will not accept your loan request.

Rapid Car Loans has a large network of lenders and dealers. It includes several sub-prime lenders who are ready to help you in fulfilling your car dream. They provide auto loans for people with bankruptcy, sub-prime credit score or zero credit history.

To get in touch with a reputed lender, apply with the company by submitting an online loan request.

The company will find you the best sub-prime lender that suits your needs and will help you in obtaining affordable car loans. This is your perfect chance of obtaining a car loan and improving your credit score. Apply now and get ready for a sub-prime car loan.

Subprime Auto Loans Help Fuel Auto Sales Boom – ABC News #murrays #auto #parts


#subprime auto loans
#

ABC News

Auto sales are booming with a strong pick-up in demand for light trucks and SUVs.

“September was another strong month,” said Karl Brauer, senior analyst at Kelley Blue Book. “The market continues to embrace trucks and SUVs at every price point, with premium brands also benefitting from a combination of fresh product and readily-available credit.”

Financing is cheap and much more widely available than right after the 2008 financial crisis, “with a significant extension of subprime lending,” said Mark Strand at AutoTrader.com. “These tailwinds have created an environment in which all the pent up demand we have talked about can be released.”

Government prosecutors are looking into liar loans, where borrowers’ incomes are inflated to enable them to qualify for high interest auto loans.

“Federal and state authorities, a group that includes prosecutors in New York, Alabama and Texas, are zeroing in on the most powerful, and arguably the least regulated, rung of the subprime auto loan chain, used-car dealerships, according to people briefed on the investigations,” reported The New York Times. “Already, they have found hundreds of fraudulent loans that together total millions of dollars.”

Money Flows Out After ‘Bond King’ Leaves

Record amounts of cash followed “bond king” Bill Gross out the door. Investors pulled $23.5 billion from Pimco’s flagship, Total Return bond fund, after he abruptly left the company last month. The fund lost more than 10 percent of its asserts after Gross departed for rival Janus Capital. The fund also lost money before Gross quit, and Pimco has been trying to calm investors.

“The fund is well positioned to meet potential redemptions, and short-term cash management is an area of expertise and strength at Pimco,” the company said in a statement.

Some of the money that flowed out of Pimco went to rivals Vanguard, Janus and DoubleLine funds. The big movements are example of the hazards of hiring and keeping star fund managers who have a big following.

Pensions: Just Like Other Debts?

A federal judge has struck a blow against the sanctity of public pensions in California by ruling that U.S. bankruptcy law permits the city of Stockton, California, to treat pension fund obligations like other debts, allowing the city to cut benefits.

Stockton argued that it must make its pension contributions for public employees before its creditors are paid the entire amount they are owned.

The case was being closely watched because it could help clarify who gets paid first by financially strapped cities.

Detroit Bankruptcy

Emergency manager Kevyn Orr is due back on the witness stand in Detroit’s multibillion-dollar bankruptcy trial. Testimony is scheduled to resume this morning before federal Judge Steven Rhodes.

A lawyer for the city questioned Orr on Wednesday on the physical condition of the city and its finances when he was hired by the state last year.

Orr has described Detroit as a cash-strapped city with blighted neighborhoods, service delivery problems, old equipment and tons of debt.

Facebook Apologizes

Facebook is apologizing to the LGBT community for a recent crackdown that resulted in the suspension of a number of profiles.

Facebook’s VP of product made a statement on the site, saying a single user flagged a number of pages for using fake names. Facebook then suspended the accounts without realizing why they were using fake names.

Facebook apologized to the “affected community of drag queens, drag kings, transgender, and extensive community of our friends, neighbors, and members of the LGBT community.”

Members of the Facebook team met with members of the LGBT community Wednesday and promised “more deliberate customer service” in the future.

Next subprime bubble to burst: auto loans #auto #financing


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Subprime auto loans are on the rise and, just like subprime mortgages, are claiming untold victims.

Samuel Perez, 32, is still dealing with fallout from his experience with a subprime loan five years ago, he told The Post.

Officials at Woodside, Queens, dealership Auto Palace offered him an 8.49 percent interest rate on a BMW, with a teaser rate of 6 percent after six months. Perez worked out a financing deal that included monthly payments and trading in an Audi and rolling its payments into the new car.

The rate never made it down to 6 percent since the BMW didn’t work properly, so Perez returned it. But the dealer wouldn’t give him back the Audi, which it had not paid off, or release him from the debt on the BMW, even though he’d never received title.

Perez found himself scrambling to borrow a car to get to work — while fending off bills on two cars he didn’t have, or own, which hurt his already low credit score, he told The Post.

This situation is not limited to small lenders, either — large banks are jumping into the fray.

Just last week, Ally Financial’s new chief executive hit the accelerator into the roughly $300 billion market for subprime auto loans.

Jeffrey Brown said Ally, the biggest player in the auto lending market, wants to boost the amount of subprime auto lending to as much as 15 percent of all loans, as US automakers reported a nearly 14 percent sales jump in January for new cars over last year’s levels.

With interest rates that can at times exceed 20 percent, subprime auto loans are a risky but popular revenue stream for banks — and often a devastating move for consumers.

The marketplace in which auto loans are made to consumers with a credit score below 640 is so shady that multiple regulators, from New York Department of Financial Services head Benjamin Lawsky to Manhattan US Attorney Preet Bharara, are investigating possible abuses.

Regulators have requested documents from Ally and other major auto lenders Santander Consumer USA and GM Financial regarding securitization of subprime auto loans.

Perez turned to Brooklyn attorney Ahmad Keshavarz for help. Keshavarz filed a lawsuit against Auto Palace and two other defendants alleging a range of harms, including violations of the Fair Credit Reporting Act, breaches of warranty and violations of the Truth in Lending Act, according to court documents. Auto Palace could not be reached for comment.

The defendants settled, and Perez bought another car.

In 2012, the Queens County District Attorney’s Office charged Auto Palace and its owners with $730,000 in sales tax fraud, and its former finance manager with defrauding customers out of $115,000.

The owners pleaded guilty in 2013 and paid $150,000 to the New York Department of Taxation and Finance. The former finance manager pleaded guilty to grand larceny and was sentenced to two to four years in jail.

Civil cases are still pending against Auto Palace by the Consumer Affairs Department and Department of Motor Vehicles.

“I learned from my mistake,” says Perez.

There are many signs that the subprime auto loan market is reaching unsustainable levels. Delinquencies, average loan balances and loan terms are all increasing nationwide.

In New York, the share of subprime loans has grown to 18.6 percent of consumers from 14.2 percent in 2009, and average loan size is up 5 percent to $18,874, according to Equifax.

“Loans will start blowing up,” says Wolf Richter, Web publisher of wolfstreet.com.

Is there a subprime auto loan bubble? #carolina #auto #parts


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Is there a subprime auto loan bubble?

Vehicle Sales agreement with pen (Photo: Getty Images/iStockphoto)

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Subprime mortgage lending shouldered much of the blame for the last financial crisis.

Now some observers are concerned that a recent jump in subprime auto loans could also mean disaster for markets.

According to the Federal Reserve Bank of New York. the number of auto loans made to borrowers with credit scores below 660 has nearly doubled since 2009 – a much greater increase than in any other loan type. Other studies find repossessions climbing as well.

Will these trends precede another stock market crash? Experts say no, but there are still reasons for those with subprime loans to be cautious.

Why are people concerned about subprime auto lending?

It’s not just the number of loans to borrowers with low credit scores that has analysts on edge, but also allegations of dealer misbehavior and subprime auto loans’ involvement in the stock market.

“Not all subprime loans are inappropriate,” said Lawrence White, a professor of economics at New York University’s Stern School of Business. “But no lender should put a borrower into a loan he or she can ill-afford.”

Chris Kukla, senior vice president at the Center for Responsible Lending, notes that common practices – like rolling warranties and other products into auto loans. offering longer loan terms and loosening underwriting criteria – seem to be fueling other disturbing trends.

“Between the second quarter of last year and the second quarter of this year, Experian has reported a 70% increase in the repossession rate,” Kukla said.

Subprime auto loans are also being bundled into risky securities, like subprime mortgage loans were in the late 2000s. “We’ve seen a lot of Wall Street money chasing these loans,” said John Van Alst, an attorney for the National Consumer Law Center.

Are we in another subprime lending bubble?

Most are hesitant to call the rise in subprime auto lending a bubble.

Mike Schenk, senior economist with the Credit Union National Association, thinks the increase is to be expected. “The downturn pushed a lot of people who weren’t subprime into that category. If you sat down with a lot of these people now, you’d find that they’re back on track.”

Scale is also a factor. “The overall size of the auto loan market is less than one-tenth of the overall size of the mortgage market,” White said. “The magnitude is smaller. Nobody expects the price of the underlying collateral to be always going up.”

He added,”I can’t imagine the same economy-shaking consequences that the collapse of subprime mortgage lending had.”

A higher rate of auto loan defaults probably won’t tank the markets.But questionable lending practices are still hurting some of the most vulnerable auto loan borrowers.

“It’s different than the mortgage market in absolute dollar amounts, but we’re talking about an awful lot of people,” Van Alst said.

More than half of consumers in most states have subprime credit.

Predatory loans put low-income borrowers at risk for repossession, jeopardizing their ability to get to work. They also stress other parts of borrowers’ budgets. “You might start to see delinquency in their other debts,” Kukla said.

What’s being done about deceptive loan practices?

“Subprime auto loans are certainly something that we’re looking at,” said Malini Mithal, assistant director of the Federal Trade Commission’s Division of Financial Practices. “In the past few years, we’ve brought more than 20 cases to protect consumers in auto-related actions. Many of these have addressed issues affecting subprime consumers.”

Last January, the agency cracked down on a group of dealerships found to be misrepresenting customers’ monthly payments. Other cases have addressed dealerships that allowed customers to trade in cars on which they still owed money, requiring them to pay off their old car and their new car at the same time.

“A car is one of many consumers’ biggest purchases, and drivers often figure the amount they can pay down to the dollar. Illegal lending practices can have a big impact on their bottom line,” said Mithal.

One issue that still concerns Kukla and the Center for Responsible Lending is dealer interest rate markup. Lenders often allow dealers to add to a buyer’s interest rate as a form of compensation. “People who bought a car in 2009 paid $25.8 billion in interest over the lives of their loans associated with dealer markup,” Kukla said.

Kukla points out that the practice is disallowed in mortgage lending and hopes to see the same happen with auto loans. “There’s a lot of ways you can compensate a dealer without the fair lending risk. It would have a huge impact on consumers,” he said.

NerdWallet is a USA TODAY content partner providing general news, commentary and coverage from around the Web. Its content is produced independently of USA TODAY.

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U. S. Government Investigating GM Over Subprime Auto Loans #auto #quote


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U.S. Government Investigating GM Over Subprime Auto Loans

(Adds background of GM Financial, scrutiny of subprime auto lending)

By Aruna Viswanatha and Peter Rudegeair

WASHINGTON/NEW YORK, Aug 4 (Reuters) – The U.S. government is investigating General Motors Co’s auto financing arm over subprime auto loans it made and securitized since 2007, the company disclosed on Monday.

General Motors Financial Co Inc said it was served with a subpoena from the Department of Justice directing it to turn over documents related to underwriting criteria.

The subpoena, which the company said was in connection with an investigation into possible violations of the civil fraud law FIRREA, also asked for information on the representations GM made about the criteria when the loans were pooled into securities.

Financial services firms have paid billions of dollars to resolve investigations under FIRREA into questionable mortgages pooled into securities in the run-up to the financial crisis. The new subpoena could be one of the first public acknowledgements that investigators are also looking at the securitization of subprime auto loans.

FIRREA, the Financial Institutions Reform, Recovery and Enforcement Act, allows the Justice Department to sue over fraud affecting a federally insured financial institution.

GM Financial was known as AmeriCredit Corp until the carmaker acquired it in October 2010. It issued $2.15 billion in securities backed by subprime auto loans in the first six months of 2014, making it the second-largest issuer of such securities for the period.

INCREASED SCRUTINY

The disclosure of the subpoena accompanies increased regulatory scrutiny of subprime auto loans.

The Office of the Comptroller of the Currency, which regulates national banks, warned in a June report that “signs of risk in auto lending are beginning to emerge.”

Its assessment was based on lenders’ willingness to lengthen terms, chase borrowers with lower credit scores, and offer loans to buy cars that exceeded the value of the vehicle.

The disclosure also comes as the auto industry increasingly relies on subprime auto loans for growth.

New auto loans to borrowers with the lowest credit scores were up 51 percent in the first quarter compared to the same period in 2013, according to Experian Automotive.

Meanwhile, new auto loans to borrowers with the highest credit scores were down 7 percent over the same time frame.

Separately, regulators have brought some recent cases against auto lenders over allegations of discrimination.

In December, GM’s former financing arm, Ally Financial Inc, agreed to pay $98 million to resolve claims by the Justice Department and the U.S. Consumer Financial Protection Bureau that it charged minority borrowers higher interest rates than white borrowers.

A Justice Department spokeswoman had no immediate comment on the new GM subpoena. A spokesman for the consumer financial bureau declined to comment on whether the agency was examining potential fraud by auto lenders in the origination or securitization of subprime loans. (Reporting by Aruna Viswanatha in Washington and Peter Rudegeair in New York, additional reporting by Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila and Andrew Hay)

Subprime Auto Lending: How the Gov – t Can Stop a New Financial Crisis #auto #usate


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The Next Subprime Crisis Will Ride on Four Wheels—Unless the Government Stops It

Having failed to act on the subprime mortgage crisis, federal regulators now have a shot at redemption. This week, a top official at the Justice Department vowed to fully investigate subprime auto lending, which has in recent years become a major way to make a buck by targeting low-income communities.

Subprime auto loans don’t represent an existential threat to the U.S. economy: With $21.8 billion in subprime securitizations last year, the market is roughly 1/50 th the size of mortgage-backed securities at the height of the bubble. But low-income borrowers are still being swindled by unscrupulous dealers, or forced into giving up their cars because of a loan they could never afford. And though auto dealers, active in every local community, carry tremendous political power, nobody in this industry is too big to jail. If law enforcement cannot take down small-time frauds, there’s no hope for the big ones.

The proliferation of subprime auto loans results from two post-financial crisis factors. First, investors lost interest in mortgage-backed securities, but still sought out investments with enough risk to bring decent yields. So they migrated to subprime auto securities. The market has grown every year since 2009.

The second boost for subprime auto lending was the auto dealer carve-out from Consumer Financial Protection Bureau oversight in the 2010 Dodd-Frank Act. Former Congressman John Campbell, a former car dealer who received $7 million a year from renting out six dealerships and one repair shop while in office, pushed through the giveaway. Like escaped prisoners running away from a klieg light, financiers moved into the one market where regulators weren’t allowed to look.

The Federal Trade Commission has primary jurisdiction over auto dealers. “Historically they have not taken an aggressive approach,” said Chris Kukla of the Center for Responsible Lending. The CFPB, meanwhile, has jurisdiction over the financial companies buying the loans, while the Securities and Exchange Commission regulates the securitizations and the prudential banking regulators also monitor some of the key players. This allows the industry to play regulators off one another for maximum leniency. “It’s hard enough to convince one regulator of the problem,” said Kukla. “It’s good that you have lots of cops on the beat, but the bifurcation can be problematic.”

These factors have super-charged the market. Subprime customers took out $129.5 billion in auto loans in the first eleven months of 2014, over one-quarter of total auto sales, according to credit-reporting bureau Equifax. And just like in the subprime mortgage days, increased investor appetite has pressured financiers and dealers to weaken underwriting standards. Regulators are probing numerous instances of falsified loan applications and inflated incomes.

Just as troubling are the ways dealers gouge borrowers that may be more unethical than illegal. The average term on a subprime auto loan is now 66 months, according to CRL’s Chris Kukla. Dealers stretch out the terms to make the monthly payment look smaller, but over time the borrower pays more. They also make a lot of money selling add-ons like extended warranties and service contracts, some of which have questionable value. Subprime borrowers often trade in cars worth less than they owe, rolling the debt onto the back of the new loan in an eerie recall of the bubble-era mortgage refinancing boom. Interest rates can be as high as 30 percent in some states, even though lenders can repossess the car if the borrower defaults. And defaults are rising: Missed payments on car loans are at a post-financial crisis high. according to Moody’s Analytics.

Increased defaults make sense when you consider the layers of risk placed on borrowers. The average loan-to-value ratio on a subprime car loan is as high as 150 percent. Buyers are deeply “underwater” on their loan the moment they drive off the lot. And that’s before auto dealers charge their “dealer markup,” points on the interest rate dealers add as compensation for matching the borrower and lender. Dealers often shop for financial institutions that allow them to issue the biggest markup. When borrowers are told the final interest rate, they have no idea how much of that goes to the dealer as pure profit.

These dealer markups disproportionately affect people of color. Studies show that African-Americans and Hispanics pay higher interest rates than white people, even when they try to negotiate the loan. “People of color who tried to negotiate got worse interest rates than whites who didn’t,” said Kukla.

The Justice Department is probing this raw material to bring cases, which fall into two parallel categories. First, as JPMorgan Chase has admitted in regulatory filings, they are in discussions with Justice over racial disparities on their dealer markups. The investigation grew out of a CFPB partnership. enforcing the Equal Credit Opportunity Act. Ally Bank has already paid $98 million in fines over the same practices, and both Honda and Toyota’s financing arms have acknowledged their potential exposure.

But Sally Quillian Yates, acting number two at the Justice Department, named a variety of other potential offenses in her speech to the National Association of Attorneys General on Tuesday. She included securities fraud, origination fraud and deceptive consumer practices. That could include faking borrower incomes, knowingly making false promises to investors about the quality of subprime auto loan securitizations, or selling worthless warranties to customers. Several companies, like Ally Financial and Santander Consumer USA. have already received subpoenas for information on underwriting and securitization.

Kukla credits aggressive media investigations of subprime auto loans, including an ongoing New York Times series. for finally calling attention to the industry’s problems. It could spur additional regulations to weed out still-legal practices, like usurious interest rates, excessive loan terms or “starter interrupts,” where lenders can shut off delinquent borrowers’ vehicles remotely. without any due process affirming the default. “There’s a severe lack of regulation in auto lending,” Kukla said. “The good result here is that people are starting to pay attention.”

Will these federal investigations yield results? The Justice Department has been criticized repeatedly for its inability to prosecute individuals responsible for the financial crisis. But the auto lending space seems like a classic environment for flipping the smaller players (the loan officers/brokers) to get to the decision-makers at the top (the dealers/lender executives). The industry will whine about preventing access to credit, but preventing fraudulent conduct is actually federal prosecutors’ job description. In a relatively small market, without the threat of extreme collateral consequences for cracking down, DOJ should have the freedom to go wherever the investigations take them.

Early signs have not been promising. That settlement with Ally Financial over dealer markup discrimination implicated no individuals, and Ally didn’t have to admit to wrongdoing. In these investigations, the government appears to be using a statute, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which has a lower burden of proof but only allows for civil and not criminal penalties. In her speech Tuesday, Yates stressed that financial penalties are “not a substitute for holding individuals within those institutions personally accountable for their actions.” But talk is cheap.

Without an aggressive push on auto lending fraud, the Justice Department will signal that it is just as unserious as it was about mortgages, content to impose one-off financial settlements that do nothing to deter misconduct. As Sally Yates said this week, “We shouldn’t wait until there is a crisis to pay attention.”

Subprime Car Loans Online #goodyear #auto #service


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Subprime Car Loans – How To

Although finding an auto lender who offers auto loans to men and women with bad credit is simple, it is important that you find a dealer that you can trust. For those who wish to buy a used or new car a dealer may offer a chance to take advantage of financing options. It is important that you choose a lender that will point out all of the options that you have. If you wish to take advantage of bad credit auto loans, the following steps will help make things easier.

Check Your Personal Credit Report

Before you begin to apply for subprime car loans, you need to ask for a copy of your personal credit report. Look at your credit report and remember your FICO score. You will need to know your credit score before you apply for different car loans. This is mainly because your auto lender will base his or her approval on your credit history and your credit score after you have submitted your application. There are many different auto lenders who will classify subprime borrowers as men and women who have a score that is below 640. However, other lenders may offer those with a score under 640 prime rates.

Compare Different Auto Loan Rates

Do not settle for the one of the first few car loans that you come across. It is important that you shop around first. Many lenders who offer subprime car loans qualify applicants with different rates. It may cost you more money if you do not shop around. You can visit different auto loan Web sites for more information. Request a no obligation quote that can tell you everything that you need to know about that particular car loan. Many quotes will include details such as your loan approval amount, your qualifying interest rate, your estimated monthly payment, and your loan term.

Boost Your Low Credit Score

There is no doubt that raising your low credit score before you try to obtain subprime car loans can save you money. However, this does not happen overnight. You need to stay vigilant and work hard at it. In fact, many lenders may approve your application if they notice that you are improving your credit habits. Before you apply for car loans, you should try to work on your credit score. You can do this by submitting regular payments to any of your creditors. You can also try to reduce your overall debt ratio. By paying off some of the debt that you owe you are showing that you can pay back your potential auto lender.

Subprime car loans increasing. #auto #repair #estimates


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Subprime car loans increasing

Posted: 6 am ET

Car buyers with bad credit are getting increasingly bigger car loans as the economy improves.

The latest data from credit bureau TransUnion show that car buyers in the subprime credit category have seen a 6.6 percent increase in car loan balances from the first quarter of this year, compared to the same period in 2012. That increase marks an 11 percent jump of auto loan balances over the first quarter of 2011. Currently, the average auto loan balance for a consumer with subprime credit has risen $1,200 in 2013 over the same period in 2012.

Car loan balances on the whole only increased 4 percent in 2012 from the same period in 2012 and 8 percent over the last two years.

The increase in auto loan amounts should be a relief to car buyers with bad credit, but it is a bit of a concern to TransUnion analysts who noted that although delinquency rates have not increased during the last two years, there could be an economic burden on lenders if more loans become delinquent due to the increased balances.

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Subprime Auto Lenders #automobiles


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Subprime Auto Loans and Lenders

Need a car? Has your credit seen better days? Then you will probably need to find subprime auto lenders willing to accept your credit. Fortunately, we specialize in connecting auto loan applicants to lenders who work with subprime credit. By partnering with subprime auto loan lenders all across the nation, we maximize your chances of getting approved. When you apply online, our sophisticated system places your application with the best lender for your personalized needs. Matching criteria include:

  • Your Location
  • Your Credit Score
  • Your Down Payment
  • Your Debt-to-Income Ratio

Ready to get started? Click here to apply online .

What is Subprime Auto Financing?

For starters, let s talk about credit scores. They fall in a range of 300 to 800. The average credit score in the United States is about 680. Credit scores of 620 to 679 are generally classified as subprime. This is simply means it falls below the prime credit range of 680 to 720. Additionally, credit scores of lower than 620 may also be categorized subprime, deep subprime, or simply bad. Typically, a person who need a subprime auto loan has issues on their credit record such as:

  • Limited Credit History
  • Delinquent or Unpaid Debts or Bills
  • Limited Collateral to Secure the Loan
  • High Amount of Existing Debt in Relation to Income

Most banks and captive auto finance companies will be hesitant to approve auto loans for people with subprime credit. After all, they want to make sure that the candidate is likely to pay down their car loan. If their credit report seems to indicate otherwise, then they become a risky investment for the auto lender.

However, reports now indicate that about 40% of Americans have subprime credit. For this reason, subprime auto lenders have become a popular alternative to traditional banks. They cater to people with less-than-perfect credit.

Subprime Auto Loans Help Fuel Auto Sales Boom – ABC News #used #autos


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ABC News

Auto sales are booming with a strong pick-up in demand for light trucks and SUVs.

“September was another strong month,” said Karl Brauer, senior analyst at Kelley Blue Book. “The market continues to embrace trucks and SUVs at every price point, with premium brands also benefitting from a combination of fresh product and readily-available credit.”

Financing is cheap and much more widely available than right after the 2008 financial crisis, “with a significant extension of subprime lending,” said Mark Strand at AutoTrader.com. “These tailwinds have created an environment in which all the pent up demand we have talked about can be released.”

Government prosecutors are looking into liar loans, where borrowers’ incomes are inflated to enable them to qualify for high interest auto loans.

“Federal and state authorities, a group that includes prosecutors in New York, Alabama and Texas, are zeroing in on the most powerful, and arguably the least regulated, rung of the subprime auto loan chain, used-car dealerships, according to people briefed on the investigations,” reported The New York Times. “Already, they have found hundreds of fraudulent loans that together total millions of dollars.”

Money Flows Out After ‘Bond King’ Leaves

Record amounts of cash followed “bond king” Bill Gross out the door. Investors pulled $23.5 billion from Pimco’s flagship, Total Return bond fund, after he abruptly left the company last month. The fund lost more than 10 percent of its asserts after Gross departed for rival Janus Capital. The fund also lost money before Gross quit, and Pimco has been trying to calm investors.

“The fund is well positioned to meet potential redemptions, and short-term cash management is an area of expertise and strength at Pimco,” the company said in a statement.

Some of the money that flowed out of Pimco went to rivals Vanguard, Janus and DoubleLine funds. The big movements are example of the hazards of hiring and keeping star fund managers who have a big following.

Pensions: Just Like Other Debts?

A federal judge has struck a blow against the sanctity of public pensions in California by ruling that U.S. bankruptcy law permits the city of Stockton, California, to treat pension fund obligations like other debts, allowing the city to cut benefits.

Stockton argued that it must make its pension contributions for public employees before its creditors are paid the entire amount they are owned.

The case was being closely watched because it could help clarify who gets paid first by financially strapped cities.

Detroit Bankruptcy

Emergency manager Kevyn Orr is due back on the witness stand in Detroit’s multibillion-dollar bankruptcy trial. Testimony is scheduled to resume this morning before federal Judge Steven Rhodes.

A lawyer for the city questioned Orr on Wednesday on the physical condition of the city and its finances when he was hired by the state last year.

Orr has described Detroit as a cash-strapped city with blighted neighborhoods, service delivery problems, old equipment and tons of debt.

Facebook Apologizes

Facebook is apologizing to the LGBT community for a recent crackdown that resulted in the suspension of a number of profiles.

Facebook’s VP of product made a statement on the site, saying a single user flagged a number of pages for using fake names. Facebook then suspended the accounts without realizing why they were using fake names.

Facebook apologized to the “affected community of drag queens, drag kings, transgender, and extensive community of our friends, neighbors, and members of the LGBT community.”

Members of the Facebook team met with members of the LGBT community Wednesday and promised “more deliberate customer service” in the future.

Now It s Subprime Auto Loans Under Scrutiny – ABC News #auto #electrical #supplies


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ABC News

Federal prosecutors are looking into the booming business of subprime auto loans. The investigation raises questions about whether GM and other firms have been selling questionable auto-loan investments to investors. The recent rise in auto sales has been fueled largely by consumer lending. Subprime loans are often made to borrowers who have poor credit histories. GM Finance says it has received a subpoena from the Department of Justice for documents related to subprime auto loans made since 2007. The Justice Department is said to be considering a civil lawsuit for potential violations of the Financial Institutions Reform, Recovery and Enforcement Act, a federal law that was passed following the savings and loan crisis in the 1980s.

General Motors says it has made progress in fixing its recall website so that it correctly lists all the cars that need repairs. The company says it expects the site to be fully corrected this week. The government had said Friday that GM’s vehicle identification number look-up system has been incorrectly telling some owners that their cars aren’t being recalled. That happened when the cars’ parts weren’t available. But the government says all recalls should be listed.

Gannett is spinning off its publishing business from its broadcasting and digital operations. The company is also acquiring full ownership of Cars.com for $1.8 billion. The decision follows moves by Tribune, Time Warner and Rupert Murdoch’s News Corp in breaking off print media from their rapidly expanding broadcast operations. Gannett says the publishing business will basically be debt free once spun off, with the broadcasting and digital businesses holding the existing debt.

Sand is the new gold. Prices are going up as mining companies increase fracking at oil and natural gas sites. “Sand is a key ingredient in items from solar panels to smartphones, but in recent years billions of pounds of it have been poured down wells to help coax more fuel out of the ground,” The Wall Street Journal says. During the fracking process, sand is mixed with water and chemicals. “Frackers are expected to use nearly 95 billion pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made by energy-consulting firm PacWest Consulting Partners a year ago,” the Journal reports.

Standard & Poor’s rating agency says the rising wealth gap in the United States is complicating the rebound from the recession, and raising the risk of boom-and-bust cycles. S width:670px;height:90px”
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Next subprime bubble to burst: auto loans #used #cars #for #sell


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MORE ON:

Subprime auto loans are on the rise and, just like subprime mortgages, are claiming untold victims.

Samuel Perez, 32, is still dealing with fallout from his experience with a subprime loan five years ago, he told The Post.

Officials at Woodside, Queens, dealership Auto Palace offered him an 8.49 percent interest rate on a BMW, with a teaser rate of 6 percent after six months. Perez worked out a financing deal that included monthly payments and trading in an Audi and rolling its payments into the new car.

The rate never made it down to 6 percent since the BMW didn’t work properly, so Perez returned it. But the dealer wouldn’t give him back the Audi, which it had not paid off, or release him from the debt on the BMW, even though he’d never received title.

Perez found himself scrambling to borrow a car to get to work — while fending off bills on two cars he didn’t have, or own, which hurt his already low credit score, he told The Post.

This situation is not limited to small lenders, either — large banks are jumping into the fray.

Just last week, Ally Financial’s new chief executive hit the accelerator into the roughly $300 billion market for subprime auto loans.

Jeffrey Brown said Ally, the biggest player in the auto lending market, wants to boost the amount of subprime auto lending to as much as 15 percent of all loans, as US automakers reported a nearly 14 percent sales jump in January for new cars over last year’s levels.

With interest rates that can at times exceed 20 percent, subprime auto loans are a risky but popular revenue stream for banks — and often a devastating move for consumers.

The marketplace in which auto loans are made to consumers with a credit score below 640 is so shady that multiple regulators, from New York Department of Financial Services head Benjamin Lawsky to Manhattan US Attorney Preet Bharara, are investigating possible abuses.

Regulators have requested documents from Ally and other major auto lenders Santander Consumer USA and GM Financial regarding securitization of subprime auto loans.

Perez turned to Brooklyn attorney Ahmad Keshavarz for help. Keshavarz filed a lawsuit against Auto Palace and two other defendants alleging a range of harms, including violations of the Fair Credit Reporting Act, breaches of warranty and violations of the Truth in Lending Act, according to court documents. Auto Palace could not be reached for comment.

The defendants settled, and Perez bought another car.

In 2012, the Queens County District Attorney’s Office charged Auto Palace and its owners with $730,000 in sales tax fraud, and its former finance manager with defrauding customers out of $115,000.

The owners pleaded guilty in 2013 and paid $150,000 to the New York Department of Taxation and Finance. The former finance manager pleaded guilty to grand larceny and was sentenced to two to four years in jail.

Civil cases are still pending against Auto Palace by the Consumer Affairs Department and Department of Motor Vehicles.

“I learned from my mistake,” says Perez.

There are many signs that the subprime auto loan market is reaching unsustainable levels. Delinquencies, average loan balances and loan terms are all increasing nationwide.

In New York, the share of subprime loans has grown to 18.6 percent of consumers from 14.2 percent in 2009, and average loan size is up 5 percent to $18,874, according to Equifax.

“Loans will start blowing up,” says Wolf Richter, Web publisher of wolfstreet.com.

Auto Loan Surge Fuels Fears Of Another Subprime Crisis: NPR #fox #auto


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Listen to the Story

Auto dealers are extending loans to a growing number of people with weak credit.

Joe Raedle/Getty Images

The number of Americans buying autos approached a record high last year. It’s one more sign of how much the economy is improving.

But there’s a big potential downside that’s evoking comparisons to the subprime mortgage boom. Auto dealers are extending loans to a growing number of people with weak credit, and more of them are having trouble making payments.

When Chris Westervelt moved from Texas to Alaska to take a job, he decided to trade in his Mazda for a car that could handle snow and ice.

“I started looking at vehicles that had four-wheel drive capabilities and I ended up settling on a Jeep Wrangler,” Westervelt says.

He went to a dealer and test drove a car. “They said, ‘Go ahead and take the Jeep home, you know, come back sometime tomorrow and, you know, we’ll get everything settled,’ ” Westervelt says. “So, after driving around a little and coming back, the store manager actually got a little aggressive with me. He’s like, ‘You’ve already put 200 miles on my Jeep. What am I going to do? I can’t resell this,’ ” Westervelt says.

Subprime Loans Are Boosting Car Sales #auto #tader


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Subprime Loans Are Boosting Car Sales

A woman came into Alan Helfman’s showroom in Houston in October looking to buy a car for her daily commute. Even though her credit score was below 500, in the bottom eighth percentile, she drove away with a new Dodge Dart. A year ago, “I would’ve told her don’t even bother coming in,” says Helfman, who owns River Oaks Chrysler Jeep Dodge Ram, where sales rose about 20 percent this year. “But she had a good job, so I told her to bring a phone bill, a light bill, your last couple of paycheck stubs, and bring me some down payment.”

As the fifth anniversary of the Federal Reserve’s policy of keeping interest rates near zero approaches, the market for subprime borrowing is again becoming frothy, this time in the car business instead of housing. U.S. auto sales, on pace for the best year since 2007, are increasingly being fueled by borrowers with spotty credit. They accounted for more than 27 percent of loans for new vehicles in the first half of the year, the highest proportion since Experian Automotive (EXPN:LN ) began tracking the data in 2007. That compares with 25 percent last year and 18 percent in 2009, as lenders pulled back during the recession. “Perhaps more than any other factor, easing credit has been the key to the U.S. auto recovery,” Adam Jonas, an analyst with Morgan Stanley (MS ). wrote in an October note to investors.

The money for subprime loans comes from yield-starved investors who buy bonds backed by them. Issuance of such bonds, which pay higher rates than U.S. government debt, soared to $17.2 billion this year, more than double the amount sold during the same period in 2010, but still below the peak of about $20 billion in 2005, according to Harris Trifon, an analyst at Deutsche Bank (DB ) .

The interest rates on subprime auto loans can climb to 19 percent, according to Standard Poor’s (MHFI ). “Right now, you have to have fairly bad credit to be paying above 3 percent,” says Jessica Caldwell, an analyst with auto research firm Edmunds.com. Chrysler Group (F:IM ) has been a beneficiary of the subprime boom. Fifty-eight percent of loans taken out to purchase its Dodge brand vehicles in October were above an annual percentage rate of 4.2 percent, the industry average, according to Edmunds. The average loan for a Dodge charged an APR of 7.4 percent, and 23 percent of the loans had APRs of more than 10 percent, making Dodge the brand with the highest percentage of loans at more than 10 percent, followed closely by Chrysler and Mitsubishi (7211:JP ). Dodge’s U.S. sales rose 17 percent this year through October compared with a year earlier, propelling Chrysler Group to 43 straight months of rising sales.

About 13 issuers have raised money in the asset-backed bond market to make subprime auto loans this year, according to Citigroup (C ). Among them are GM Financial, the lender known as AmeriCredit before it was acquired by General Motors (GM ) in 2010, and new entrants such as Exeter Finance, owned by Blackstone Group (BX ). Exeter has issued $900 million of bonds linked to subprime auto loans this year, data compiled by Bloomberg show. Exeter has higher loss rates compared with other lenders, S P said in a Sept. 17 report. A spokeswoman for Exeter declined to comment.

Shoddy home loans packaged into bonds by Wall Street banks fueled the financial crisis. Subprime auto loans are a good investment, Helfman says: “A person that has to get from point A to point B, they’re not going to jeopardize their job. They have to pay the car payment before they pay anything else.” His Dodge Dart customer with the bad credit had to pay a higher-than-average interest rate on her loan. “It wasn’t pretty, but it wasn’t crazy,” he says. She was “so happy she couldn’t see straight.”

Subprime borrowers have easier time getting car loans #auto #donation


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Subprime borrowers have easier time getting car loans

By Fred O. Williams

If you have blemished credit, you can expect a hard time opening a new credit card account. But getting an auto loan? That’s a different story.

Auto loans have come roaring back, and less-than-prime borrowers are invited to the party. That’s creating new opportunities to get out of a clunker — maybe at a less painful rate than you’d expect to pay.

There’s more subprime (auto lending) today even than right before the recession, said Melinda Zabritski, senior director of automotive credit at Experian.

Borrowers with credit scores below 680 got about 27 percent of new car loans in the second quarter of 2013, Experian found, vs. 25 percent in 2007. Contrast that with auto lending during the depths of the downturn. About midway through 2009, the share of nonprime loans was about 17.5 percent of new vehicle financing. That’s a big difference, Zabritski said.

There’s also a big difference between auto loans and credit card lending. Since mid-2009, auto loan balances have grown by $71 billion, while balances on credit cards fell $156 billion, according to the Federal Reserve Bank of New York. At least some of the difference is due to easing of standards for auto loans. Auto lenders made $21.2 billion in new- and used-car loans to subprime borrowers with scores under 620 during the second quarter of 2013, according to the New York Fed — more than double the amount during the same period in 2009.

The figures indicate that subprime borrowers, who were formerly limited to the used-car market and high-rate loans, have more opportunities to roll out of dealerships on new wheels.

How to take advantage of the trend? While there are growing opportunities to look beyond used-car lots and buy-here, pay-here financing, which cater to subprime borrowers, there are still steps you should consider in order to get a square deal. Researching your creditworthiness before you shop for financing is a basic first step, experts say. You can get an estimated credit score online and review your full credit report via AnnualCreditReport.com.

Where do you stand?

Philip Reed, senior consumer advice editor at Edmunds.com, recommends preapplying for an auto loan, using online lender websites, as a basic part of your research.

The beauty of applying for preapproved loans is, it’s like running your credit, Reed said. There are online lenders that will give you a credit limit and an interest rate. Armed with those figures, you can step onto the asphalt of a car lot with greater confidence. Since this is a loan application, it will show as a hard pull on your credit record, which marginally lowers your credit score. As you shop for financing, however, subsequent car loan applications will be consolidated with this one and scored as a single pull.

If the interest rates available (online) were about 6 percent, and you go into a dealership and they offer you 8 (percent), you know something isn’t right, Reed said. But if you show them the quote you got from a competing lender, the dealer may say, ‘We can beat that.’

Gerry Ryan, general manager at Sport Chevrolet in Silver Spring, Md. says he sees lenders acting more competitive.

Banks are taking a hard look at stuff — money’s becoming more available, he said. At his car lot, the lenders Ally, Wells Fargo and GM Financial are all vying to make loans through the dealership, so they’ve got to be on their toes.

The state of rates is low

Often a loan through the dealership’s financing office will end up being the most economical choice, experts say. But getting quotes independently from a bank or credit union is also important — both for research and as a negotiating tool.

While promotions on some vehicles tout 0-percent financing, those deals are limited to a narrow slice of applicants with top credit scores. Across all borrowers, the average rate for a new vehicle loan was 4.46 percent in the second quarter, Experian found.

The overriding good news is, when rates go down, they go down in all of the credit tiers, Reed said. There was a time when 6 percent was a good rate for even prime borrowers.

Zabritski said that, for some credit tiers, rates have already changed direction and are edging back upward. For deep subprime borrowers with scores 550 and below, average rates were about 13.4 percent, compared to 13 percent a year earlier.

Another way for auto borrowers to help their cause is to save for a down payment. As a rule of thumb, banks will require 15 percent down on a new car loan, and experts say it’s a better idea to put down 20 percent.

Banks are taking a hard look at stuff — money’s becoming more available.

Next subprime bubble to burst: auto loans #auto #price


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Subprime auto loans are on the rise and, just like subprime mortgages, are claiming untold victims.

Samuel Perez, 32, is still dealing with fallout from his experience with a subprime loan five years ago, he told The Post.

Officials at Woodside, Queens, dealership Auto Palace offered him an 8.49 percent interest rate on a BMW, with a teaser rate of 6 percent after six months. Perez worked out a financing deal that included monthly payments and trading in an Audi and rolling its payments into the new car.

The rate never made it down to 6 percent since the BMW didn’t work properly, so Perez returned it. But the dealer wouldn’t give him back the Audi, which it had not paid off, or release him from the debt on the BMW, even though he’d never received title.

Perez found himself scrambling to borrow a car to get to work — while fending off bills on two cars he didn’t have, or own, which hurt his already low credit score, he told The Post.

This situation is not limited to small lenders, either — large banks are jumping into the fray.

Just last week, Ally Financial’s new chief executive hit the accelerator into the roughly $300 billion market for subprime auto loans.

Jeffrey Brown said Ally, the biggest player in the auto lending market, wants to boost the amount of subprime auto lending to as much as 15 percent of all loans, as US automakers reported a nearly 14 percent sales jump in January for new cars over last year’s levels.

With interest rates that can at times exceed 20 percent, subprime auto loans are a risky but popular revenue stream for banks — and often a devastating move for consumers.

The marketplace in which auto loans are made to consumers with a credit score below 640 is so shady that multiple regulators, from New York Department of Financial Services head Benjamin Lawsky to Manhattan US Attorney Preet Bharara, are investigating possible abuses.

Regulators have requested documents from Ally and other major auto lenders Santander Consumer USA and GM Financial regarding securitization of subprime auto loans.

Perez turned to Brooklyn attorney Ahmad Keshavarz for help. Keshavarz filed a lawsuit against Auto Palace and two other defendants alleging a range of harms, including violations of the Fair Credit Reporting Act, breaches of warranty and violations of the Truth in Lending Act, according to court documents. Auto Palace could not be reached for comment.

The defendants settled, and Perez bought another car.

In 2012, the Queens County District Attorney’s Office charged Auto Palace and its owners with $730,000 in sales tax fraud, and its former finance manager with defrauding customers out of $115,000.

The owners pleaded guilty in 2013 and paid $150,000 to the New York Department of Taxation and Finance. The former finance manager pleaded guilty to grand larceny and was sentenced to two to four years in jail.

Civil cases are still pending against Auto Palace by the Consumer Affairs Department and Department of Motor Vehicles.

“I learned from my mistake,” says Perez.

There are many signs that the subprime auto loan market is reaching unsustainable levels. Delinquencies, average loan balances and loan terms are all increasing nationwide.

In New York, the share of subprime loans has grown to 18.6 percent of consumers from 14.2 percent in 2009, and average loan size is up 5 percent to $18,874, according to Equifax.

“Loans will start blowing up,” says Wolf Richter, Web publisher of wolfstreet.com.

Uber program offers auto loans to subprime borrowers – Nov. 5, 2014


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Uber program offers auto loans to subprime borrowers

Uber has a new controversy on its hands.

Uber doesn’t make auto loans itself; it connects drivers to lenders like Santander Consumer USA, which make loans that can be paid off via deductions from their Uber paychecks.

The loan program was highlighted Tuesday by tech blog Valleywag, which noted that Uber has been pitching the program specifically to borrowers with poor credit.

“Even if you have bad credit or no credit at all, we can help you get behind the wheel in a week,” the company says in a promotional video.

Valleywag quoted a number of alleged Uber drivers complaining about the terms of the loans, which one described as “just laughably bad, and left for the desperate and/or uneducated.”

5 stunning stats about Uber

Loans to subprime borrowers — those with poor credit who face harsher repayment terms as a result — played a central role in the 2008 financial crisis. In recent months, federal regulators have reportedly been investigating subprime auto lenders amid concerns about onerous rates and a potential bubble in the sector.

Uber declined to comment on the rates drivers are offered, but it defended the program, saying it “provides drivers with discounts on cars as well as access to financing that may not otherwise be available to them.”

“We’re very proud of the fact that thousands of our driver partners have participated in the program and collectively saved millions of dollars to date,” the company said.

In a blog post announcing the program last year, Uber CEO Travis Kalanick said the loans were low-risk because drivers “have a robust, reliable cash flow through the Uber platform.”

Santander declined to comment.

This kind of criticism is nothing new for Uber. The company has faced repeated protests from drivers over its fare policies, and has tangled with regulators in a number of cities as it aggressively expands. It’s also taken heat for sending thousands of fake ride requests to rival car-hailing service Lyft.

CNNMoney (New York) November 6, 2014: 3:48 PM ET

Subprime Car Loans Online


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Subprime Car Loans – How To

Although finding an auto lender who offers auto loans to men and women with bad credit is simple, it is important that you find a dealer that you can trust. For those who wish to buy a used or new car a dealer may offer a chance to take advantage of financing options. It is important that you choose a lender that will point out all of the options that you have. If you wish to take advantage of bad credit auto loans, the following steps will help make things easier.

Check Your Personal Credit Report

Before you begin to apply for subprime car loans, you need to ask for a copy of your personal credit report. Look at your credit report and remember your FICO score. You will need to know your credit score before you apply for different car loans. This is mainly because your auto lender will base his or her approval on your credit history and your credit score after you have submitted your application. There are many different auto lenders who will classify subprime borrowers as men and women who have a score that is below 640. However, other lenders may offer those with a score under 640 prime rates.

Compare Different Auto Loan Rates

Do not settle for the one of the first few car loans that you come across. It is important that you shop around first. Many lenders who offer subprime car loans qualify applicants with different rates. It may cost you more money if you do not shop around. You can visit different auto loan Web sites for more information. Request a no obligation quote that can tell you everything that you need to know about that particular car loan. Many quotes will include details such as your loan approval amount, your qualifying interest rate, your estimated monthly payment, and your loan term.

Boost Your Low Credit Score

There is no doubt that raising your low credit score before you try to obtain subprime car loans can save you money. However, this does not happen overnight. You need to stay vigilant and work hard at it. In fact, many lenders may approve your application if they notice that you are improving your credit habits. Before you apply for car loans, you should try to work on your credit score. You can do this by submitting regular payments to any of your creditors. You can also try to reduce your overall debt ratio. By paying off some of the debt that you owe you are showing that you can pay back your potential auto lender.

Subprime car loans increasing.


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Subprime car loans increasing

Posted: 6 am ET

Car buyers with bad credit are getting increasingly bigger car loans as the economy improves.

The latest data from credit bureau TransUnion show that car buyers in the subprime credit category have seen a 6.6 percent increase in car loan balances from the first quarter of this year, compared to the same period in 2012. That increase marks an 11 percent jump of auto loan balances over the first quarter of 2011. Currently, the average auto loan balance for a consumer with subprime credit has risen $1,200 in 2013 over the same period in 2012.

Car loan balances on the whole only increased 4 percent in 2012 from the same period in 2012 and 8 percent over the last two years.

The increase in auto loan amounts should be a relief to car buyers with bad credit, but it is a bit of a concern to TransUnion analysts who noted that although delinquency rates have not increased during the last two years, there could be an economic burden on lenders if more loans become delinquent due to the increased balances.

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