American Car Center Suddenly Shuts Its Doors
I have always said that debt is not a problem until it is a problem. At that point, it is an overnight nightmare.
American Car Center is a sub-prime car dealer. Here is what www.pymnts.com reported:
Subprime lender American Car Center has reportedly closed amid a rise in auto loan delinquencies.
“The Memphis-based used car seller notified employees Friday (Feb. 24) that it was shutting down its operations, closing its headquarters, and firing its workers, Bloomberg News reported, citing people familiar with the matter.
The same sources say the closure email followed an earlier message to staff saying American Car Center had been working with lenders to boost its liquidity and stay in business.
PYMNTS has reached out to American Car Center and its owner, the hedge fund York Capital Management, but has yet to receive a response.
The company — which operated 50 dealerships, mostly in the U.S. southeast — is shutting down at a time when Americans are increasingly struggling to make car payments as the cost of owning a vehicle continues to rise.”
This new report has barely even circulated through the media as of yet. This high-profile subprime car dealership fought until its resources ran out. It was at that point that they abruptly shut down operations. Lehman Brothers literally did the same thing. They were in business one day and had collapsed by the next day. (Note – the Lehman Brothers failure was much more involved – I am simply pointing out an example of a company running out of money.)
Subprime means they were selling cars and loaning money to people with poor credit scores – people who were the greatest threat of defaulting on their car loans. You generally see the subprime operations go first. This is what happened during the financial crisis with sub-prime mortgages. The subprime lenders went first.
The lists of risk continue to build. Are your investments ready for potentially turbulent times?
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