Ritholtz: Subprime Auto Loans Extremely Various Than Subprime Home Loans

While car sales enhanced in 2015 by 5.7 %, according to Autodata research pointed out by Ritholtz, information from the Federal Reserve Bank of New york city showsdemonstrates how the total quantity of vehiclevehicle loan outstanding was more than $1.1 trillion in the fourth quarter of 2015, a 30 % increase from pre-financial crisis levels.

Here are Ritholtz four points, taken verbatim, on why its really easy to repo a vehicle and offer it again, make sure to check out the entirethe entire column for total responses.

1. GPS equipped cars will be found

Subprime loan underwriters frequently need borrowers to have their cars equipped with a gadget that permits the loan provider toremotely disablethe ignition.

2. Say Cheese

Photos are taken of countless plates a day, with scanners mounted on tow trucks as well as on purpose-built electronic camera vehicles whose sole objective is to drive around and collect plate scans.

3. LPRs will discover you

License-plate-readers, or LPRs as they are understood, are now commonly found at shopping center entrances, mounted on energy poles, parking lots, toll plazas, and at major highway entryways.

4. Drones are everywhere

Some repo companies areusing dronesto track cars and repossess automobiles; they also can track drivers via their own cellphones.

So while subprime automobile loans are for individuals with bad credit are why they are able to get auto loans and home loans, it does not imply that the banks are going to fall again, it just means the rise in repossessed cars may end up enhancing car sales, Ritholtz concludes.