Too many borrowers are likely driving away with cars they can’t afford, said Janet Tavakoli, president and founder of Tavakoli Structured Finance. Tavakoli sounded alarms about the mortgage bubble before its collapse. Now she’s predicting troubles brewing in auto securities.
“The auto loan market is very similar to what we saw before,” she said, calling loanfraud one of her biggest concerns. “Borrowers aren’t well-documented, and in many cases they don’t even need credit scores,” she said. “It’s a real scandal this is happening.”