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JAMIE DIMON FLIRTS WITH RETIREMENT…

Subprime Auto Loans Are Getting Messy.

Huge profits in subprime caused specialized dealers/lenders to take big risks, which came home to roost. But prime auto loans are in pristine shape.

Subprime doesn’t mean “low income,” it means “bad credit”; it means a history of taking on too much debt and not paying those debts and other obligations as agreed, which caused their FICO score to drop into the subprime category.

And subprime auto loans are getting into trouble, after the free-money era got them temporarily out of trouble. In April, 5.23% of subprime auto loans were 60 days or more delinquent, the worst April on record, and a hair above the prior record of April 2020.

The index is seasonal, with highs every January or February and lows in April or May, as tax-refund season bails out many a borrower. February 2024 had been the highest of any month on record with a delinquency rate of 6.4% (red). But prime auto loans are in pristine conditions (blue).

Source: Wolfstreet


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