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Car Trouble
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Car Trouble

Gary Rivlin
Mother Jones, 2016
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Editorial Rating

8

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  • Innovative

Recommendation

If you thought the 2008 US housing crash was the end of subprime bonds, think again. In this article, former New York Times reporter Gary Rivlin charts the rise of Wall Street’s latest billion-dollar baby: the subprime auto loan. He mainly focuses on the history of subprime auto-lending “pioneer” Don Foss’s auto-financing company Credit Acceptance, but Rivlin’s pointed analysis of the ongoing fight to regulate predatory auto lending carries broad, future-looking implications. getAbstract recommends this article to readers with an interest in the auto and financial markets.

Take-Aways

  • Used-car salesman Don Foss pioneered the subprime auto loan industry when he established the auto-financing firm Credit Acceptance in 1972.
  • Businesses like Credit Acceptance profit by offering auto loans with high interest rates to people with poor or no credit. When borrowers default, lenders profit from repossession, delinquency and legal fees.
  • Subprime auto lenders partner with car dealerships that could not otherwise sell to customers with low incomes and low credit scores.

About the Author

Former New York Times reporter Gary Rivlin is co-editor of the Economic Hardship Reporting Project. He has written five books, including Katrina: After the Flood.

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