The Detroit Free Press recently published an article about the increase of auto loan delinquencies in July. Check it out:
More people are defaulting on high-risk auto loans and a credit rating agency predicts the trend could continue through the end of 2016 as prices of used cars are beginning to fall.
The percentage of people who qualified for subprime (FICO score of 600 or lower) auto loans but are 60 days or more behind on payments reached 4.59% in July, a 17% increase from a year earlier, according to Fitch Ratings.
Delinquencies among prime auto loan borrowers also rose, but remain at a manageable 0.4%, or 21% higher than a year ago.
But these loans are packaged into bundles which are sold to investors, much like mortgages were packaged into bundles a decade ago before rising interest rates caused many of them to default, eventually triggering the deepest economic crisis since the Great Depression.
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