If you haven’t been living under a rock for the past few years, you’ve undoubtedly heard of the subprime mortgage crisis. You know, those days where almost anyone could obtain a mortgage to finally purchase that home they’ve been dreaming even if they had poor credit scores? The catch of course was ridiculous rates and confusing terms. That obviously didn’t bode too well for homeowners or the market.
As things seem to become slowly or relatively better in the housing market, it comes to surface that our nation may have another subprime crisis on our hands, but this time in the form of subprime auto loan lending. When examining one of the leaders in world car sales, namely General Motors, it is evident that their success has been achieved at the expense of those with poor credit.
According to The Washington Free Beacon article, Grand Theft Auto Loans,
General Motors is doubling down on the subprime strategy. Only 4 percent of GMF borrowers had credit scores above 660 in 2012, compared to nearly 8 percent in 2011.
Additionally, GMF now represents more than 7 percent of the entire subprime market and its number of subprime borrowers may be even higher, according to company executives.
And according to this AP article, “Some 32.4 percent of new auto loans issued in the July-September period were made to nonprime borrowers, up from 30.6 percent a year earlier. ”
Could this be the next bubble to burst? We surely hope not.