Subprime Auto Loans Increase

USA Today reported on the growing number of subprime auto loans being made in the United States.  Such loans are made to high-risk borrowers with poor credit scores.  According to USA Today:

  • Since 2009 the number of auto loans made to high risk borrowers with credit scores below 660 has doubled.
  • In the past year the repossession rate for automobiles has increased by 70%.
  • The amount of interest paid by consumers for auto loans is staggering. For those purchasing automobiles on credit in 2009, an aggregate interest of nearly $26 billion will be paid on those loans.
  • In most states more than one half of the consumers have some form of subprime credit.

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Corporate Bonds at Record Levels

The Wall Street Journal reported that corporations are issuing US bonds, i.e. taking on debt, at record levels.  This is the third consecutive year for a record.  So far for 2014 the issued bonds are just shy of $1 trillion.

When corporations sell bonds, typically this is done to raise funds to be used for future expansion.  Such expenditures are usually productive and can be beneficial to the economy as a whole.  However, these are not normal economic times. Continue reading

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