
Subprime Auto Defaults Are Soaring, and PE Firms Have No Way Out - thisisit
https://www.bloomberg.com/news/articles/2017-12-21/subprime-auto-defaults-are-soaring-and-pe-firms-have-no-way-out
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downrightmike
The way out is to stop scamming people.

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mariuolo
Thing is the people selling the loans aren't the ones who will have to be
repaid, so they'll do anything for that commission.

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akanet
Those of you interested in the gory details of just how shady subprime auto
lenders are getting should read this recent report on one of the big lenders:
[https://www.plainsite.org/realitycheck/creditacceptance.html](https://www.plainsite.org/realitycheck/creditacceptance.html)

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JonnyNova
That is what you get for giving out risky loans to marginally qualified
applicants just because you could charge high rates.

Same applies to the current student loan crisis too.

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acd
Central banks flooding banks with cheap credit. It is bound to end up
somewhere where there is profit from higher interests and then go bust. Why do
we keep saving the banks bad loans?

Is there also subprime credit card debt?

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notfromhere
who knew bad loans to folks with no means to pay for them would ever backfire?

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russh
No problem, we'll just make more of them and once the economies of scale kick-
in we'll be rich!

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allengeorge
Don’t forget to repackage them! I’ve heard that doing so, and partitioning the
resulting basket up dilutes the risk and makes them higher quality!

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cirgue
This seems like an excellent asset to insure. You're guaranteed profit unless
the entire underlying market collapses!

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perl4ever
I recall reading an article by someone or other which argued that auto loans
cannot be a bubble in the way that stocks or houses have been, because
generally there is not demand for cars by people who simply want to flip them
for a higher price. Everybody who buys a car is buying a depreciating asset
because they actually want to use it, so demand cannot get too out of control.

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corvallis
Interesting argument. Isn't the product being "flipped" the loans, and not the
autos themselves?

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notfromhere
Yes, but I can see the argument where its harder to loan out the same vehicle
multiple times for ever-higher valuations given that autos depreciate pretty
rapidly.

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TaylorGood
Impressive and intricate write up.

