The sub-prime auto loan bomb

Wells Fargo, the second largest auto lender in the US, is targeting sub-prime borrowers for auto loans, much as they targeted the broke and disenfranchised in the housing ‘market’ in the decade of 2000. But they’re not alone.

Americans had $886 billion in outstanding auto loans in the fourth quarter of 2014. The average loan amount also hit its highest level on record at $28,381, up more than $950 from a year ago.

The sub-prime auto lenders, much like the sub-prime mortgage lenders (many are the same institutions) solicit those who have recently emerged from bankruptcy, those with a history of auto repossessions, foreclosures on property and all of the above. In other words the least likely to pay off their loans.

Why? It’s simple. One, no one will lend to those with such a credit history and two, one cannot file for bankruptcy for seven years after the first filing so where’s the risk? And might we add that these loans, like the sub-prime mortgage loans, get bundled up and sold to institutions as ‘investments’.

Yep, it is all about parasitic capitalism and its decrepit institutions chasing the highest yield to the end of the cliff. And with no public transportation of any worth and the now cheap cost of fuel, reliance on the ‘car’ is a necessary evil. Big Oil and the too-big-too fail banks know. Big Auto knows this. Why don’t Americans?