Dear ,

I’m holding in my hand a printout from the website for Holy Rosary Credit Union (HRCU). It’s a small institution based in Rochester, New Hampshire, founded in 1962.

Mike's Moves to Make

Buy: Food and beverage stocks; consumer staples stocks; Targeted investments that rise in value when auto-related stocks fall

Sell: Autos; auto parts suppliers; Select banks and other lenders with elevated auto exposure

Scroll through the small print on its auto loan page, though, and you’ll see the kind of auto lending they’re doing is downright scary. They’ll happily lend you money against a depreciating asset – your car – at a 125% loan-to-value ratio. In other words, they’ll give you $31,250 on a $25,000 vehicle, exactly the kind of malarkey that blew up the mortgage industry and housing sector a decade ago.

HRCU is far from alone. USE Credit Union, which serves teachers, students, and alumni in the University of California system, will lend you up to 125% of your car’s value – and for up to seven years. Sacramento Credit Union will do you one better – 130% LTV, all according to their websites.

First Credit Union of Chandler, Arizona really takes the cake, though. Buried in the fine print of its October 17, 2016 online rate sheet, which spells out terms and interest rates on all of its loans, you find this gem: “Max All-in LTV 140%.” One-hundred and forty percent!

We have never seen an explosion of auto credit like this. Important takeaways for investors …