Dark clouds seem to be collecting throughout the credit landscape in Canada, while the forecast is starting to seem like discomfort.
In a March report, credit-rating company Moody’s stated how many automobile customers with negative equity, which happens whenever an automobile customer owes more on a trade-in automobile than it really is worth, is regarding the increase in Canada, utilizing the blame, to some extent, likely to longer terms on automobile financing.
“Longer consumer auto-loan terms increase ‘negative equity’ . because automobile values fall quicker than the loan is paid back,” the Moody’s report stated. “This shortfall is frequently rolled into the initial balance of the car that is new, compounding the negative equity and credit danger.”