Valuetainment - December 05, 2025


The Auto Subprime Crisis： Is 2025 Becoming the Next 2008？


Episode Stats

Length

8 minutes

Words per Minute

193.27074

Word Count

1,729

Sentence Count

135


Summary

Subprime auto loans are on track to hit a record high of $1.66 Trillion in 2020. Is this a good or bad thing? Is it a huge problem or is it just a symptom of a much bigger problem?


Transcript

00:00:00.000 Data has shown that there's a massive subprime auto crisis going on right now in America.
00:00:05.980 A lot of data has shown that it's similar to what happened in 2008 with mortgages.
00:00:09.980 The only difference is, at least back then when you bought a house, you had built out some equity.
00:00:14.640 Today, when you buy a car, what kind of equity are you building?
00:00:17.220 Nothing. This is a massive number we're talking about.
00:00:19.440 The deeper you get into it, you'll realize who it's affecting the most.
00:00:22.620 We're going to talk about that today.
00:00:30.000 All right, if you get value out of this video, give it a thumbs up and subscribe to the channel and stick around to the very end to realize how you can get the notes on everything we're talking about.
00:00:36.340 So, let's take a look at this.
00:00:38.140 When you look at this year, October, last month, 6.65% of borrowers in the subprime market are 60 days late.
00:00:47.700 That's 1 in 15 borrower is seriously behind, two times higher than what it was just three years ago, 1.4% above the 2008 peak.
00:00:59.440 This is not like just something people are talking about.
00:01:01.780 This is really taking place.
00:01:03.360 Now, if you talk about what is prime versus subprime, subprime borrowers are those that have a credit score, 580 to 680.
00:01:12.160 If you're deep subprime, you're 0 to 580.
00:01:14.820 And then prime is 660, 680 plus as you look at this.
00:01:17.880 So, let's go a little bit deeper on these numbers to see what's going on.
00:01:20.200 By the way, if you notice, this is a subprime issue.
00:01:23.240 Prime borrowers, which is 0.37% are 60 days behind.
00:01:27.820 That's 1 in 270.
00:01:29.500 It's not a big number that anybody's worried about with subprime borrowers.
00:01:32.880 So, if you look at this chart and we zoom in a little bit more, what do you notice?
00:01:36.940 If you notice right here, all the way to the top right, record breaking.
00:01:41.280 We've never seen that before.
00:01:42.880 Prime is totally fine.
00:01:45.120 Subprime, we peaked here, which is somewhere in the late 90s.
00:01:49.540 And in 08, you got another peak here.
00:01:51.320 But this is higher than ever before.
00:01:54.580 So, now, when you look at $1.66 trillion of America's owing to car, what percentage is subprime?
00:02:03.780 What percentage is prime?
00:02:05.300 Prime makes up for about 78 to 85% of that.
00:02:08.840 Subprime makes up 15 to 22% of that, which means the number is still a real number.
00:02:15.480 We are talking about $250 billion to $370 billion on these subprime loans.
00:02:23.380 I remember buying a car when I was in the Army back in 1997.
00:02:27.360 I bought a red Mitsubishi Eclipse from a financing company called FMAC in Clarksville, Kentucky.
00:02:33.580 I have the contract till today.
00:02:34.900 I showed it to a few of the guys a couple months ago.
00:02:37.020 You know what my rate was?
00:02:39.040 33% I was paying for this Mitsubishi Eclipse.
00:02:42.360 My payment for the first year and a half was pretty much interest only.
00:02:45.680 And that's what they're targeting, some of the subprime folks.
00:02:48.480 If you look at subprime to deep subprime, 16% is the interest rate, which you get if you're subprime.
00:02:55.720 Prime, you're on 8% to 9% today.
00:02:58.300 21.6% unused subprime loans.
00:03:02.680 And then, obviously, the horror cases, the ones I just talked to you about, 30% to 32%.
00:03:07.340 Like I said, new car, APR, you got good credit.
00:03:10.860 8% to 9% is where you're at.
00:03:12.280 So now, as we're staying on this, the reason why this is also slowly becoming a bigger issue is in the last three months,
00:03:20.220 a company called Tricolor, it's pronounced in a very different way,
00:03:24.040 just went bankrupt and shut down September of 2025.
00:03:28.500 Guess what business they were in?
00:03:30.160 Subprime auto loan.
00:03:31.400 Wait a minute, what's going on over here?
00:03:32.620 Chase comes back and says, what are you doing with all these delinquencies?
00:03:36.220 We're no longer lending at all whatsoever.
00:03:38.760 They shut down September of 2025.
00:03:41.040 Another one, Primal Land, that was also a subprime loan company for auto for folks,
00:03:48.340 they shut down in October.
00:03:50.140 So this is starting to get a lot more discussion and eyeballs.
00:03:53.740 So a lot of people are asking, what really is going on here?
00:03:56.860 Now, if you look at the reasonings for it, car prices, if you look at this, from 2012, the average car price, $30,000.
00:04:06.680 It goes to around 2020, $40,000.
00:04:11.060 But then in the last four years, we've been at $51,000.
00:04:15.360 And this, of course, when it's $50,000, EVs at $58,000.
00:04:19.540 And you're kind of sitting there realizing the average new car payment is around $745,000 to $767,000.
00:04:26.420 20% of borrowers are paying $1,000 a month.
00:04:29.960 People ask what the reasoning is.
00:04:32.000 One, of course, interest rates are affecting people.
00:04:35.560 When the interest rates went up and they haven't been lowering it, that's affecting a lot of people.
00:04:38.880 Number two is the lows being stretched for six to seven years.
00:04:42.400 So a lot of times when people are coming back to trade the car for something else,
00:04:46.440 these dealerships are like, wait a minute, we'll take the car.
00:04:49.000 In many cases, they're 28% of trade-in that happened were in negative equity.
00:04:56.160 I come in, the car's worth $6,000.
00:04:58.680 I got $8,000 loan on it.
00:05:00.320 Dealer says, well, this car you wanted to buy is $12,000.
00:05:03.100 Now I'm going to sell it to you for $14,000 because I'm rolling that $2,000 loan from your previous car.
00:05:08.020 That's happened about 28% of the time.
00:05:09.860 Number two, car insurance and repair costs have gone up the last few years.
00:05:14.860 Whether you want to call it COVID, auto theft, whatever it is, those two have gone up and people are feeling that.
00:05:20.780 Tariffs, some of the prices, would repair costs.
00:05:23.140 And last but not least, this is affecting low income and younger households.
00:05:27.720 So if you're watching and saying, I don't even know what this guy's talking about.
00:05:30.700 I'm not affected by it.
00:05:31.760 Neither am I.
00:05:33.140 It's not affecting prime people.
00:05:35.320 But if you're asking, do I feel like I'm in recession today?
00:05:38.000 You may say no.
00:05:39.040 You know who is feeling like they're in recession today?
00:05:41.880 Low income and younger households.
00:05:44.040 We're sitting here having a conversation with a couple of our guys.
00:05:46.920 They're like, you know, where are you going?
00:05:47.920 What are you paying for your car?
00:05:48.860 What are you doing with this?
00:05:49.860 The reality of it is with this, solution-wise, number one, if you're watching this right now,
00:05:55.120 saying, man, Pat, I don't even know what the solution should be for me.
00:05:57.900 Number one, we're learning very quickly.
00:06:00.160 The power of having a great credit score.
00:06:02.940 Do not screw up your credit score.
00:06:05.420 I'll give you a hint and a tip.
00:06:07.860 Over the years, I've hired a lot of different people.
00:06:09.880 When we're hiring, we run credit on a lot of executives that we hire.
00:06:13.180 And some people, we run background checks.
00:06:15.260 And we'll see, why does this person have a bankruptcy on their credit?
00:06:18.480 Do you know how often somebody has a bankruptcy?
00:06:20.440 Because a parent goes to their son and says, we're going to buy this car and put it under
00:06:26.120 your name.
00:06:27.160 They do.
00:06:28.080 They don't make the payment.
00:06:29.540 An 18-year-old didn't do anything wrong.
00:06:31.300 By 21 years old, has a credit, has a card that $68,000 loan that was written off, couldn't
00:06:36.500 pay a repo.
00:06:37.020 That person has to deal with the credit score.
00:06:39.420 If anybody's asking you, can you co-sign, can you co-sign, can you co-sign, you know what
00:06:42.960 the right answer is?
00:06:44.020 No.
00:06:44.540 I'm not co-signing, period.
00:06:45.800 I'd rather give you $200 and go do whatever you want to do with it than co-sign for anybody.
00:06:50.200 Protect your credit score.
00:06:52.400 This helps you with your career.
00:06:54.280 This helps you save money.
00:06:55.800 Obviously, it helps you when it comes down to your car payment as well.
00:06:58.080 Number two, use a 10% formula.
00:07:00.040 If you have a $50,000 income, you're like, man, what can I afford to pay for car payment?
00:07:07.380 That's say $4,000, $50,000 a year, $4,000 a month.
00:07:11.640 Maybe after taxes, you're making $3,200 a month.
00:07:14.380 What's 10% of that?
00:07:15.740 $320?
00:07:17.180 $320 is the car payment you should make.
00:07:19.040 Pat, do you want me to drive a $320 car payment?
00:07:21.800 Yes, I do.
00:07:23.360 That doesn't make any sense.
00:07:25.640 Can you imagine if I go pick up a girl with a $320 car payment, I'm driving a Mirage with
00:07:30.900 this guy, Henry's favorite car.
00:07:32.220 I don't want to freaking buy a Mirage.
00:07:33.980 Well, that's what you can afford to do.
00:07:35.700 I drove a Ford Focus, $220 a month.
00:07:38.320 You know what?
00:07:38.660 It was like a guy, my size, 6'4", 250, driving a Ford Focus.
00:07:42.060 Hey, guys, how you doing?
00:07:43.080 I'm coming out of Ford Focus.
00:07:44.160 But by the end of the year, a Mirage with my Ford Focus, I had $250,000 saved in the
00:07:48.620 bank.
00:07:48.880 Of course, I was doing sales and different things, but I saved up the money.
00:07:52.080 Then I got a nicer car.
00:07:53.180 Then the rest is history.
00:07:54.160 So use the 10% formula.
00:07:56.820 And last but not least, you want to have cash.
00:08:00.240 Because as we're having these conversations, one of our guys said, I haven't had a car payment
00:08:03.780 since I was what, 21 years old?
00:08:05.980 Hasn't had a car payment since 21 years old.
00:08:08.100 And another one of our guys says, I've had a car payment since 21 years old, right?
00:08:12.020 So both are in different situations.
00:08:13.620 So ideally, if you're able to buy something cash, you don't have the car payment that
00:08:17.220 allows you to develop and live a little bit more of a peaceful lifestyle rather than trying
00:08:21.420 to impress everybody.
00:08:22.240 But this is an issue that is going on.
00:08:24.940 Okay, so if you watch this, you want to get all the notes and the research that we did,
00:08:28.500 go to PBD Entrepreneur Circle, that QR code right there.
00:08:31.600 This is waiting for you for free.
00:08:33.360 Number two, if you enjoyed this video, you want to see another video like this having to
00:08:36.420 do with investments and money.
00:08:37.880 I shot a video titled, The Top 10 Best Investments I Made.
00:08:40.920 Click here to watch it.
00:08:42.380 You got questions for me, manek me.
00:08:44.140 If you got value out of the video, give it a thumbs up and subscribe to the channel.
00:08:47.520 Take care, everybody.
00:08:48.180 Bye-bye.
00:08:48.380 Bye-bye.