Wave of repossessions coming as subprime auto buyers miss payments
In a sign of upcoming trouble, Subprime Car Buyers Miss Loan Payments.
Credit Acceptance Corp., the lender to car buyers with subprime credit scores, warned it’s seeing a sharp drop-off in payments as people shift their financial priorities to get through the coronavirus pandemic.
As unemployment soars, borrowers are putting off payments or “reallocating resources,” Credit Acceptance said in a regulatory filing Monday, explaining that it needs more time to publish a quarterly report. New lending is also slowing as dealerships across the U.S. are forced to shutter their lots, the company said.
Ally Financial Inc. said on Monday that about 25% of its auto-loan customers have taken advantage of its payment-deferral program.
Forbearance Masks Problems
The filing by Credit Acceptance shows some consumers already can’t keep up.
Meanwhile, loan applications have plunged as dealers have closed their lots.
Author
Mike “Mish” Shedlock's
Sitka Pacific Capital Management,Llc
