What if the very company helping families with bad credit get cars just vanished overnight? That’s exactly what happened—and it’s shaking up the entire American auto market.

In a move that’s sending shockwaves through the financial world, Tricolor Holdings—a Dallas-based company that dominated the used-car lending scene for those with poor or no credit—has filed for Chapter 7 bankruptcy. This isn’t your normal business hiccup. Chapter 7 means liquidation. In simple terms, Tricolor is closing shop, and fast. For the thousands who trusted them to get their next set of wheels, the doors just slammed shut.

Tricolor wasn’t your average car dealer. As the seventh-largest independent used-car retailer in the US, they specialized in what the industry calls ‘subprime lending’—offering loans to people who usually can’t get approved anywhere else. Their main customers? Underserved Hispanic families across states like Texas, Arizona, and California. The company boasted about using advanced data analytics and technology to help those left out by traditional banks, claiming to champion financial inclusion.

The Real Cost of Keeping Your Car

But beneath the shiny promise lay a harsh reality. Social media is filled with stories of customers saddled with sky-high interest rates—sometimes double the national average. Imagine paying a staggering 22% APR just to drive a used 2017 Hyundai Elantra. One customer said he’d rather ruin his credit than keep sinking under those stressful payments. Multiply that experience by thousands, and you get the picture.

Tricolor issued over $1 billion in loans last year, many to borrowers who lacked legal documentation in the US, making their loan book extra risky. When the company started furloughing staff across multiple states and quietly shut down its website, insiders saw the writing on the wall. Some of their top execs even disappeared from LinkedIn, sparking rumors across the industry.

AI Generated Newscast About Auto Loan Fallout

Now, with Tricolor’s collapse, the ripple effects are reaching some of the world’s largest banks—JPMorgan Chase, Fifth Third Bancorp, and Barclays are reportedly staring down the barrel of hundreds of millions in potential losses tied to Tricolor’s bad loans. And it gets messier: Fifth Third claims it lost $200 million to ‘alleged external fraudulent activity’ connected to the company, prompting law enforcement to step in.

This AI generated newscast about the auto loan meltdown highlights a bigger crisis brewing in America. Car prices have soared to nearly $50,000 on average for a new ride—an $11,000 jump since 2019. The result? Americans are shouldering a record $1.66 trillion in auto loan debt, which now outweighs student loans and is only surpassed by home mortgages. Experts are sounding alarms, saying we’re teetering on a bubble not unlike the 2008 crash.

More than 5% of auto borrowers are falling behind on payments, and with inflation and high interest rates squeezing wallets tighter, things are only getting tougher. As one consumer finance analyst put it, ‘When auto loan delinquencies are rising, it’s a likely sign that people are struggling.’ For many, the American dream of mobility is slipping out of reach—and the fallout from this AI generated newscast about subprime lending is just beginning.