Whoops!! Car Loans Going Sour

What makes this story ...........interesting..........is the quality of the borrowers.

...A higher rate of auto loans are now defaulting for both sub-prime and prime borrowers (double for both), indicating the former buyers are under financial pressure and can no longer make their car payments. ...

We disagree with one element of the story presented by Last Refuge.  They propose that used-car pricing/demand is very high 'because of Covid stimulus spending.'  That's a contributor, but the principal driver was the lack of NEW cars due to factory lockdowns followed by the chip shortage.  

Regardless, this is a significant straw in the wind.  Anecdotes in the Barron's story indicate that the sub-prime default rate is now 11% and the prime default rate is 4%.  Not good, but not as bad as the overall 5% rate of late 2019, either. 

Time to panic?  Only for sub-prime lenders and (perhaps) the captive finance companies run by the manufacturers.  But it's worth watching!