Subprime auto defaults are up, but this time it's no crisis
Some on Wall Street are worried that subprime auto lenders like Credit Acceptance Corp, Ally Financial, and Santander will soon be in trouble, given reports that a rising share of borrowers with low credit scores are delinquent on their loans.
Auto lenders are behaving similarly to mortgage lenders in the run-up to the 2008 financial crash, but experts say we are not headed into another crisis (more below).
Why it's still cause for worry: Lenders are making fat profits, but there is growing evidence that a significant minority are engaging in fraudulent behavior. Borrowers in many cases have little choice but to pay such high rates if they want to be able to commute to work.