In September 2025, Tricolor Holdings filed Chapter 7 after allegedly pledging the same collateral to more than one lender. Fifth Third disclosed a potential $200 million loss.
Within two quarters, the Federal Reserve found banks had raised assessed probability of default on buy-here-pay-here obligors by roughly 150%.
That response was rational. It was also aimed at the wrong variable.
The borrowers did nothing to earn it. They kept paying, or kept not paying, at close to the rate they always had. The failure happened in a collateral file, not a loss curve. It landed on a borrower in Memphis making a $340 payment every other Friday on a nine-year-old sedan, and on every operator who could already prove title on every unit they own.
Any credit officer who has worked this sector knows the distinction. Fraud risk is diligence-solvable: lien perfection, GPS and title verification, third-party custody, unannounced audits. Credit risk is priced.
The two call for different responses, and the last nine months applied the credit response to a diligence problem. Spreads moved considerably further than the loss curves did.
Our new whitepaper covers the unit economics, the working capital math that kills operators, the funding stack, and what platforms and portfolios trade for.
76 pages, because every time this business gets explained in three slides, the slides leave out the part that matters.