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Tuesday, July 18, 2017

Auto Defaults Soar On The Back Of "Hasty Loans And, At Times, Outright Fraud"

In the years after its 2009 bankruptcy, Chrysler looked for a dedicated lender to help customers "finance their cars quickly"...which was code for a lender who could help the struggling OEM expand their market share by making extremely risky loans to subprime borrowers all while laying off the credit risk to unsuspecting pension funds. As such, Chrysler ultimately picked Santander due to its expertise in “automated decisioning”...which was code for the ability to advance credit without actually performing income verification tests on borrowers.

For a time, Chrysler and Santander enjoyed a perfect symbiotic relationship as it offered Santander an opportunity to aggressively expand in the U.S. subprime loan market, and Chrysler, the perennial third wheel among the “Big Three,” was able to target customers that were previously deemed untouchable by lenders. Of course, as Bloomberg points out today, the problems surfaced almost from the start.

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2 comments:

Anonymous said...

Getting ready to buy a BMW or Mercedes coming off 2 year lease - 10-15K miles, full warranty, certified by dealership and almost 50% less than new. Paying cash - no finance charges. Good time to buy if you have cash.

Anonymous said...

736am - many business yappers are saying the exact same thing. A glut of used vehicles about ready to hit the market and dealerships are in a panic. Way too much supply with zippy demand = bonanza for those with cash!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!