'This month, Standard & Poor's warned we could be entering the peak of a sketchy auto loan bubble that sounds suspiciously familiar.
The agency reported the number of loans packaged into securities with borrowers more than a month behind on their payments rose to its highest in three years. Several rounds of stimulus spending have driven investors to buy anything that beats inflation, experts say. That includes securities based on loans to subprime car buyers, and more loans being made to folks who can afford them less.
"We're at a turning point with respect to subprime auto loan performance, similar to where we were in 2006," said the ratings agency in its recent report, referencing the point right before the housing market collapsed.
While the auto loan market is measured in the billions, compared to the housing market's trillions, car buying is one of the main drivers of the economic cycle. Should credit for cars and trucks crash and dry up, it could hobble an already shaky recovery.'
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The agency reported the number of loans packaged into securities with borrowers more than a month behind on their payments rose to its highest in three years. Several rounds of stimulus spending have driven investors to buy anything that beats inflation, experts say. That includes securities based on loans to subprime car buyers, and more loans being made to folks who can afford them less.
"We're at a turning point with respect to subprime auto loan performance, similar to where we were in 2006," said the ratings agency in its recent report, referencing the point right before the housing market collapsed.
While the auto loan market is measured in the billions, compared to the housing market's trillions, car buying is one of the main drivers of the economic cycle. Should credit for cars and trucks crash and dry up, it could hobble an already shaky recovery.'
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