(Reuters) -Subprime lender PrimaLend Capital Partners filed for Chapter 11 bankruptcy protection on Wednesday, in another sign that low-income consumers in the United States are under strain.
The company’s filings in a Texas court showed that it listed both assets and liabilities of less than $500 million.
PrimaLend provides financing to consumer and specialty lenders through asset-based credit facilities. It also serves the “buy-here-pay-here” auto financing market, where dealers sell and directly finance vehicles for customers with poor or limited credit.
The company did not immediately respond to a Reuters request for comment. Bloomberg News first reported on the bankruptcy earlier in the day.
Subprime lenders provide loans to borrowers with weaker credit histories or lower credit scores, typically at higher interest rates to offset the increased risk of default.
Last month, Bloomberg News reported that PrimaLend’s creditors were weighing pushing the firm into bankruptcy after going unpaid for months.
Many lower-income consumers, according to analysts, are finding it harder to keep up with payments, prompting an uptick in delinquencies across auto, personal loan and credit card portfolios.
The strain reflects the cumulative impact of high borrowing costs, rising living expenses and depleted savings, which have left subprime borrowers particularly vulnerable to financial shocks.
Tricolor, which sold cars and provided auto loans mostly to low-income Hispanic communities in the Southwestern United States, also filed for bankruptcy protection in September.
Its bankruptcy has shocked credit investors and drawn allegations of fraud and misconduct in recent weeks.
(Reporting by Manya Saini in Bengaluru; Editing by Shilpi Majumdar)
Comments