Investment Riches Built on Subprime Auto Loans to Poor


Regulators and analysts caution that booming investment in subprime auto loans may enable excessive risk taking that could affect the financial sector. ____ A review by The New York Times of dozens of court records, and interviews with two dozen borrowers, credit analysts, legal aid lawyers and investors, show that some of the companies, which package and sell the loans, are increasingly enabling people at the extreme financial margins to obtain loans to buy cars.
Investigative (NATIONAL, New York, Oregon, Pennsylvania)

Jessica Silver-Greenberg, Michael Corkery
New York Times (NYT)
January 27, 2015
Read the full article

Tags: Consumer Protection, Predatory Lending


DETAILS

Across the country, there is a booming business in lending to the working poor — those Americans with impaired credit who need cars to get to work. But this market is as much about Wall Street’s perpetual demand for high returns as it is about used cars. An influx of investor money is making more loans possible, but all that money may also be enabling excessive risk-taking that could have repercussions throughout the financial system, analysts and regulators caution.

____

A review by The New York Times of dozens of court records, and interviews with two dozen borrowers, credit analysts, legal aid lawyers and investors, show that some of the companies, which package and sell the loans, are increasingly enabling people at the extreme financial margins to obtain loans to buy cars.