JPMorgan Chase's Consumer and Community Banking CEO announced earlier this week that his company will start making fewer 84-month auto loans. Gordon Smith made the announcement at a New York industry conference, saying that the move was aimed at protecting his company from facing losses in the future. Smith elaborated that if the economy were to drop again, long-term auto loans would be one of the most affected areas.
However, the announcements from Chase also included a statement that the company would continue to make roughly the same number of auto loans and that it is not seeing a greater number of delinquencies at this time. The company simply plans to reduce the length of most of its loans.
This announcement comes after comments made in June by JPMorgan Chase CEO Jamie Dimon, who noted that auto loans, especially sub-prime loans, are hitting such highs that a crash is almost inevitable. He expressed concern that when that crash comes, it is going to affect many consumers and lenders.
JPMorgan Chase is not the only lender to voice its concerns. Capital One CEO Richard Fairbank has also noted that the auto loan industry is beginning to look shaky and that many lenders are increasing their risks by lending to borrowers with thin credit. Capital One made fewer auto loans in Q4 of last year but noted that lending to car buyers has been increasing this year.
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