Subprime's New Frontier: Auto Loans

By Kevin Spak, Newser Staff

That whole "subprime crisis" hasn't scared banks away from the lucrative world of subprime lending. The nation's top subprime lenders -- like Capital One ( COF), GM Financial, HSBC and JPMorgan Chase ( JPM) -- are all trying to woo back less-creditworthy borrowers, who tend to rack up late fees while paying rates as high as 29%, the New York Times reports.

"It's clear that we are returning to business as usual," said a former Federal Reserve regulator. But that's not entirely true; the focus hasn't yet shifted to mortgages -- it's on auto loans.

More from Newser
3 Maryland Friends to Split Mega Millions Riches
Obama Just Legalized Fraud
Get Ready for $200 Cable Bills

Auto loans were left largely unaffected by new post-crisis regulations, and the market for bundled auto loan securities is expanding -- so much so that Moody's last year issued a report that it was growing "too much too fast."

In the fourth quarter of 2011, 23% of new auto loans were subprime. But lenders are also eager to roll out credit cards: In December, 1.1 million new cards were issued to people with damaged credit, the Times notes.

--Written by Kevin Spak of Newser