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Art Cashin: "Ally Auto Loan Comments 'Reverberated Through The Market"
Mentioned almost 2 weeks ago here at MFO by @Puddnhead with this link:
U.S. subprime auto lenders are losing money on car loans at the highest rate since the aftermath of the 2008 financial crisis as more borrowers fall behind on payments, according to S&P Global Ratings. Losses for the loans, annualized, were 9.1 percent in January from 8.5 percent in December and 7.9 percent a year ago, S&P data released on Thursday show, based on car loans bundled into bonds. The rate is the worst since January 2010 and is largely driven by worsening recoveries after borrowers default, S&P said. Those losses are rising in part because when lenders repossess cars from defaulted borrowers and sell them, they are getting back less money. A flood of used cars has hit the market after manufacturers offered generous lease terms. Recoveries on subprime loans fell to 34.8 percent in January, the worst since early 2010, S&P data show.
And I'll just bet that "flood of used cars" is in really top condition, because the people who didn't intend to pay for them took really good care of them.
@bee: Thanks for reminding the board about Puddhead's head's-up on auto loans. Just as an aside I own ALLY-A GMAC Capital Trust I, 8.125% Fixed Rate/Floating Rate Trust for it's excellent yield. Regards, Ted
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Regards,
Ted