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Author: admin | Category: Car Loan Canada | Date: 07.01.2015

On Monday, Fitch Ratings issued a press release discussing the performance of subprime auto asset-backed securities (ABS), which take many subprime auto loans and package them together in a process known as securitization. While perhaps not obviously related, contingent convertible securities being sold in Europe pose the risk of triggering a clause in their terms that would lead to their conversion to stock, which, while improving the issuing bank’s balance sheet, would result in a flood of supply to the market, not to mention dilution to earnings per share numbers. Recent news out of the European Central Bank that the agency intends to buy corporate bonds, as reported by the NASDAQ, is seen as being almost unprecedented.
Examples of ABS securities that bundle subprime auto loans include securities issued by Ally Auto Receivables Trust (AART) 2015-2, as reported by Moody’s, and Skopos Auto Receivables Trust 2015-2, as reported by Business Wire.
Analysts are forecasting that both Santander and Consumer Portfolio Services will report year-over-year EPS reductions over coming quarters. A Form 8K filed with the Securities and Exchange Commission details a multi-hundred million dollar deal involving Ally Financial Inc. During the first quarter of 2011, Americans’ auto loans totaled $637 billion, increasing $26 billion to $663 billion this year.
Overall, the average credit score of new car borrowers has sagged to 760, from a high of 776 in Q1 of 2010. The vast majority of all auto loans are 4-6 years, with only around 1 in 10 extending to 73-84 months. You can download the complete 34-page report from Experian here (instant download), with over 80 separate charts and graphs giving financial marketers an extremely detailed view of the auto lending market. I would wager part of the results are due to the fact that people with less than perfect credit aren’t getting loans like they used to or choose not to take the higher interest rates the loans they get approved for come with. Download Merkle’s Q2 2016 Digital Marketing Report Take a detailed look at Q2 digital trends and channel performance. A few years ago, we tested the theory of buying a debt-free car as an alternative to buying at a used-car lot or a "buy here, pay here" dealership. It is possible to buy a new car with bad credit — if you know where to look and how to prepare. From the lender's perspective, a new car has more value and therefore offers more collateral that can be reclaimed if the buyer fails to make payments. From the dealership perspective, a new car is an investment in a relationship that will pay off in other ways later on.
If you're someone who has bad credit but wants to buy new, it is best to start planning for it well in advance, as you would with any major purchase. Getting your actual credit score typically costs money, but your score will give you an idea of the credit tier into which you fall. Once you get the free credit report, pay close attention to the section that points out potentially negative items, also called risk factors.
Rather than viewing them as black marks on your credit, "These risk factors can empower you as a consumer to help rehabilitate your credit," Griffin says.
Because your credit is bad, you will be paying a high interest rate, perhaps as high as 18 percent in California, for example.


To find out which car dealers may be willing to finance people with iffy credit, pay attention to radio commercials or billboards from dealerships that say things such as "Your job is your credit!" or "Bad credit? Many dealership Web sites have credit applications you can fill out online to get pre-approved. When you go into the dealership to talk about financing, you need to bring along some important paperwork. Halim gives an example of a deal made for someone with bad credit: a $16,000 Nissan Versa, minus a $1,000 bonus cash incentive, financed for 72 months with $1,000 down. These numbers will vary based on how much you're putting down, what you're financing and what you've been approved for, but it gives you a rough idea on what this type of deal looks like.
Just remember that it could be worse if you were dealing with a "buy here, pay here" car purchase. A number of new-car dealerships offer their credit-challenged customers the chance to trade into another vehicle without a significant increase in their monthly payment, provided they've made a year's worth of consecutive on-time payments. If you want to move up to a larger or nicer car, a smarter strategy is to refinance the current loan for a lower interest rate and monthly payment, then stick out the loan until the initial car is paid off. If you've done your credit homework, shopped within your price range and made all your payments, you've not only improved your credit score but also set up positive finance habits that will serve you well for years to come. Subprime mortgages packaged in a similar manner are seen as being responsible for the 2008 subprime mortgage collapse.
Combined with negative interest rates, as reported by the Financial Post, the buyback news from the ECB marks a curious time in the economic history of the globe. Perhaps interesting to note is that the Deutsche Bank name appears in both the subprime auto and CoCo conversations.
This report is an extremely valuable resource, and you won’t find anything else quite like it, certainly not for free.
Since credit is harder to come by these days one could reason that those better at paying their bills would be the ones still taking out loans. Leverage these insights to establish benchmarks and improve your digital advertising program. There are a number of reasons why a lender would let someone with a troubled credit history finance a new car.
The lender also has the assurance that a new-car buyer will actually keep up with payments. But it will pay dividends when customers refer their family and friends, resulting in more car sales, including some that will be profitable for the dealership.
Run it at least three months before you plan on buying so you can take action on any outstanding items, recommends Rod Griffin, director of public education for credit reporting company Experian. Risk factors could be anything from an old debt that went to collection to a fine you had to pay in a civil court case.
The risk factors are present in all reports, so if you fix an issue you found on one credit report, the action will be reflected on all the other reports.


For $40, you get your credit score from Experian and a 35-minute session with a credit educator. They may be more willing to approve you since you already have an established financial relationship with them. These items will allow a dealership to establish who you are and confirm that you have a job, that you have a history of making monthly payments on time and have friends or family the dealership can contact to find you if you stop making payments.
A sizable percentage of the loan will be the interest ($9,927 in this example), but this is the reality when you're borrowing in this credit tier. While talking to Halim, for example, we heard about a customer who had purchased a car from a "buy here, pay here" dealership and no longer wanted the car. While it may be tempting to get out of a Nissan Sentra and into a Nissan Altima, for example, you will be adding more debt to your next loan. When it's time to purchase your next car, you should be in a higher credit tier (assuming you've also done well on your other bills), and will qualify for a nicer car.
With over 80 charts and graphs, this is the most thorough study The Financial Brand has ever seen on the subject of car loans. Comparatively, credit scores in Q1 of 2008 were at an average of 753 for new vehicles and 653 for used.
For credit unions, the percentage of 30-day delinquencies is significantly lower, at 1.24%, a 13% reduction since last year. Repossessions among both banks and credit unions are down in 2012, averaging around 1 in every 425 cars financed. The sales also pay off when people get their vehicles serviced in the maintenance department. You might also try Road Loans from Santander Consumer USA, which specializes in subprime loans. As long as you apply for loans in a 14-day period, they will only count as one "hard" inquiry on your credit report. Consumer Portfolio Services beat analyst expectations in the fourth quarter of 2015 by 7.4 percent. Years later, the initial customers will likely trade in those "no-profit" cars for new ones. For example, if you scale back and purchase a $17,000 compact sedan, you'll free up $100 per month. The person already had made 22 payments of $322 and still owed $3,800 on the principal, thanks to an exorbitant interest rate.



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