How Can These Two Trends Coexist?

by John Rubino
Dollar Collapse

Before the pandemic, auto sales were booming, mostly because car loans were available to pretty much anyone with a driver’s license and a heartbeat. “Subprime” auto loans – which charge high interest rates and run for up to eight years (hence the nickname “car mortgage”) — accounted for about 20% of a $1 trillion+ market.

[…] Not surprisingly, the past year’s lockdowns have popped that mini-bubble:

Risky Borrowers Are Falling Behind on Car Payments

(Wall Street Journal) – More subprime borrowers are missing monthly payments on their cars and trucks, pointing to an uneven economic recovery

A greater share of people with low credit scores has been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic.

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