There is good news and bad news in the realm of car loans for borrowers in Alabama. The good news is auto loan delinquencies are down to 2.38 percent, which is the lowest delinquency rate for a second quarter since 2006. However, the bad news is banks are increasing the number of loans they are making to subprime borrowers. Banks increased their subprime loan percentage from 34 percent to 36 percent.
The rise in subprime auto loans is attributable to stiff competition in the auto lending market. According to statistics, banks' market share of the auto loan market fell from 40 to 36 percent while competitors gained market share. While this loosening of credit means more people will be able to get auto loans, it could mean more people will be taken advantage of by banks and repossessions may rise.
In hard economic times many find themselves facing sudden unemployment, decreased Income, and other financial challenges such as healthcare costs. When any of these events happen, coupled with high interest rates on subprime loans, a borrower may find it extremely difficult, perhaps even impossible, to make their car payments. Missed payments may lead to creditor harassment and repossession. Having a car stripped away may leave some individuals without a way to their only source of income, thus making the situation much worse.
Though subprime auto loans, a poor economy, and personal financial hardships may increase delinquencies and repossessions, these individuals still have an option to seek protection from creditors and to find a new start. By consulting with an attorney, an individual in this situation can assess whether filing for bankruptcy is in his best interest. Chapter 7 bankruptcy, if chosen, would allow the borrower to have debt forgiven once existing assets are sold and proceeds paid to creditors. Though the individual may still lose his car, the repossession may be stayed for a certain period of time, allowing the borrower to make other arrangements.
Some things in life are almost required to get ahead. One of those assets is a vehicle. When financial challenges arise and make paying for that vehicle difficult, the borrower should not have to suffer harassment, fear, and stress for an indefinite period of time. Instead, he should seek help from an attorney who can help him achieve the second chance he deserves.
Source: CNBC, "Subprime déjà vu: Bank car loan lending standards ease," Sep. 3, 2013