ALLY BANK MAKING CAR LOANS TO PEOPLE WITH 520 CREDIT SCORES- NO WONDER ITS STOCK DROPPED 17.5%

all everybody welcome back to aux talks thanks for watching the show today I very much appreciate uh you guys supporting this channel liking sharing the videos as far and wide as you can with uh co-workers colleagues family members everybody you can think of uh so we can keep waking Folks up about the economy but also please subscribe to the channel if you haven't subscribed uh we are growing the community and it means a lot to me so thanks for watching I have a story that I touched on briefly yesterday that came out later in the day regarding uh the Alli bank issue with the autol loan delinquencies but I thought it was worth giving it actually a regular length maybe a eight or 10 minute video as opposed to a one minute short yesterday as I started digging in further I looked at the Ali Bank you know what kind of uh you know customers do they do they cater to uh their stock did not recover today but this is uh simp this is a symptom of an alien consumer it's a symptom of people continuing to uh try to finance things that they can't afford and in many respects their credit score is reflective of the fact that they should not be acquiring these vehicles so let me delve into the story a little bit deeper because I think it's worth a while for all of us to pay attention to because again I think this is just the tip of the iceberg you're going to start seeing uh you know a Cascade of autol loan delinquencies Auto auto repossessions uh Banks you know bank failures banks that cater to these subprime uh borrowers let me Jump Right In yesterday's story was out of market watch and it says Ali Financial Corporation stock fell sharply on Tuesday after the consumer lender said delinquencies and its retail car loan business were up more than expected as people continued to struggle with inflation Alli Financial stock was down 17.62% at the closing bail its biggest one-day decline since it fell 21.8% on March 16th of 20120 right so biggest daily decline going back about four and a half years for Ally Financial and I just checked the uh ticker tape today the market is closed as of now and the stock did not recover today okay so it's down almost 20% in the last two days I didn't it didn't fall today but it basically finished flat the stock gave back all of its gains for the year on Tuesday and ended the session down 6.4% so far in 2024 it said the financial firm has seen is seeing more strain in its Consumer Car Loan business and warned it may take longer than expected to achieve its long-term Target a 15% return on tangible common Equity I then pulled up a story on Investopedia today uh where the CEO made some specific comments uh which I believe was the Catalyst for the stock to fall but it's not it's not the stock it's not the CEO's comments it's what's behind that and we're going back to the struggling uh consumers and struggling people in this country and this article from Investopedia says allly stock drops as its CFO says consumers are struggling and delinquencies are rising says Allied Financial stock sank sharply after the bank's CH CFO said an investor conference that consumers are struggling with inflation and that Alli banks credit challenges have intensified during the current quarter allly CFO Russ Hutchinson said Tuesday that allies typical borrower is struggling with a high inflation and cost of living and now more recently a weakening employment picture according to a transcript of Tuesday Barkley's event provided by Alphas sets so we all know inflation's High I'm going to cover inflation uh later on today probably in a separate video on the heels of the release this morning uh so we'll delve into that yes inflation and core inflation especially all the important things continue to go up but what this caught what caught my attention here is the cfo's comments about weakening employment picture what that means is layoffs means that people don't have jobs you don't have jobs they can't find a job uh or they've been laid off from their job and what happens when they have debt like autol loan debt and other types of debt they can't afford to make the payments okay say allies shares were down 18% we talked about that a particularly difficult area says of allies loan base is in the auto market Hutchin said said Ally experienced a rise in delinquencies of about 20 basis points above where Ally expected for the last two months net charg that's a lot 20 basis point rise in delinquencies over what they expected so this is picking up steam this is catching momentum people are are literally broke it says um net charge off a net charge off excuse me the debts a financial institution writes off on the Assumption they will never get repaid we about 10 bases points higher than Ally expected across July and August we talked about charge offs in yesterday's video as it relates to credit card charge offs on credit card bills that people can no longer afford to pay we talked about charge offs for Discover card I believe Capital One and those are both also uh on the on the uh on the rise huderson said allies is expecting its rate of net charge offs to rise in the coming months because of the size of the pool of borrowers Ally believes is struggling listen to this especially those with loans over two months past due okay so they have a substantial enough pool of people that are 60 days or more behind on their auto loan payments okay that they're saying that they're expecting the size of the pool of borrowers uh that they believe is struggling to continue to rise Alli reduced its exposure it says to the lone world with the sale of its Ally lending arm earlier this year and then what I do was I just quickly pulled up from allies website a snapshot of you know a comparison I said well you know I'm trying to find out are they a subprime lender or what and Ali Bank it says loan terms for auto loans it will lend uh on loan terms up to 84 months that is horrible number one 84 months loan terms it didn't specify loan amount or starting APR I'm sure they're higher interest rates here's the thing though they they will lend as long as you have a minimum credit score FICO score of 520 guys do your own research on that 520 uh FICO scores it all is all it takes to get your foot in the door to get an auto loan evidently with Alli bank and they wonder why their stock dropped 178% yesterday they wonder why their pool of consumers is uh is 60 days are more behind on their auto loan payments well that's one real good indicator right there because if you have a credit score of 520 again I know there are outlier circumstances when you guys have people have unforeseen events medical emergencies uh you know medical bills for thems or a loved one I know there are extenuating circumstances but by and large folks with 520 FICO scores are just irresponsible with their money uh they're over in they're over ending themselves and they're simply uh you know kind of in the category of loserville if you will and again sure I'll get some hate comments for that but it is inconsistent bill paying uh it's late uh it's not making your payments uh you know not the minimum payments you should be making uh it's defaulting on debt it's having maybe a bankruptcy or things in your record again we all go through uh issues where your credit score can take a hit but Ally obviously is making their a lot of uh their let say revenues off of catering to people that have bad credit okay so that's what's going on with Ally and what this means look at if you're 60 days I don't mean you as in to the Watchers but if if someone is 60 days or more late on their car loan it is let's say um probably not going to let's say rise where they can get that loan back on track that is a strong indicator that they're going to go 90 days late 120 late you saw the thumbnail I I did today for the video and guess what eventually that car is g to get hooked up by a repossession agency it's gonna get towed out of their garage get towed off their driveway get towed away from their place of business whatever it is it's going to end badly so again I know it's not great uh information today but we need to just be awake as to what's happening all right and if you're one of those that is struggling you know and and don't leave me hate comments yeah I know needs a vehicle all that kind of stuff I get it uh but we've got to do our best to pull ourselves out of the hole that we're in okay uh the government's not going to help us the handouts are not um are not necessarily on the way the rates are not necessarily going to start uh pre precipitously dropping like we're being led to believe uh and we know how much uncertainty there is on the political front right now without going into detail on that you know what I'm talking about I'll leave it there today at about 10 minutes hope you guys enjoyed the content please subscribe to the channel keep supporting uh its growth thank you very much talk to you soon bye