The Consumer Financial Protection Bureau today issued this report on risky auto loans. The report finds that there is a pronounced trend toward longer, riskier auto loans. And the long-term, more costly loans are — not surprisingly — being take out by consumers with lower credit scores who are less likely than other consumers to be able to pay them off. Read the agency's press release. Here's a key excerpt:
The Consumer Financial Protection Bureau (CFPB) today released a report on auto loan trends that found a sharp increase in riskier longer-term auto loans. According to the report, 42 percent of auto loans made in the last year carried a payback term of six years or more, compared to just 26 percent in 2009. The growth of these longer-term loans has largely come at the expense of five-year loans, which declined over the same period. The CFPB found that six-year auto loans are riskier—they cost more, are used by consumers with lower credit scores to finance larger amounts, and have higher rates of default.
