FTC Subprime Auto Lending Investigation Could Be Early Sign Of A Deteriorating Market

Credit Acceptance Corp. CACC 0.08% shares are down more than 5.1 percent on Friday after Bloomberg reported that the Federal Trade Commission has requested information from the company regarding its use of ignition kill switches and GPS systems in debt collection.

Kill switches in vehicles allow lenders to turn off vehicles when borrowers fall behind on payments, and GPS tracking allows lenders to easily locate vehicles for repossession. The FTC is apparently concerned that Credit Acceptance Corp, DriveTime Automotive Group and other auto lenders are threatening to use this technology as a means to pressure borrowers into repaying debts.

Just A Small Portion Of Something Larger

The Bloomberg report notes that the Credit Acceptance Corp information request is part of a larger investigation into subprime auto lender practices.

The Better Business Bureau of Detroit has given Credit Acceptance Corp an “F” rating for customer interaction. The company hasn’t responded to 11 complaints filed complaints filed with the BBB.

When Benzinga reached out to Credit Acceptance Corp for comment on the report, a representative said, “We are aware of the FTC’s information request and have no comment at this time.”

There have recently been an increasing number of analyst and media concerns about abuses in the subprime auto market potentially mirroring those that occurred in the subprime housing market prior to the financial crisis.

In 2016, Fitch reported that the number of seriously delinquent subprime auto loans had reached its highest level since 1996. The total amount of outstanding U.S. auto loan debt is now above $1 trillion.

Height Financial Services analyst Edwin Groshans believes…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common SenseI don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!