“Business is business! And business must grow…” Ah, Dr. Suess had a way of explaining Capitalism to kids, no? Well, the automotive sector is doing everything it can to bigger itself, as it naturally would. Ford has thought to do something, though, that has industry experts worried about the past repeating itself. The first time, it happened through a burst housing bubble. Is a car loan bubble next?

In a bid to juice F-150 sales before the quarter closes, Ford has reportedly started offering its lowest interest rates (once reserved for buyers with top-tier credit) to subprime borrowers.

It’s the kind of tactic that looks clever on a quarterly earnings call but has “long-term mess” written all over it. Here’s what’s happening.

The Wall Street Journal reported that Ford is slashing borrowing costs across the board on its F-150 lineup

Okay, right, cool. But! It’s doing so even for buyers with bad or no credit.

These “subvented” interest rates (financed at a loss by Ford’s captive finance arm) are meant to make $60,000, $70,000, even $80,000 F-150 trucks look more “affordable.”

With new car loan averages hovering above 9%, offering 0.9 or 1.9% interest to anyone with a pulse is a dramatic shift.

The message is clear: if you can fog a mirror, Ford will write you a loan

This strategy isn’t happening in a vacuum.

Automakers across the board are sitting on too much inventory and too few qualified buyers. The pool of consumers with excellent credit is shrinking, but production lines haven’t slowed down.

As the guys over at CarEdge explain, that mismatch pushes companies to loosen lending standards and expand their customer base into riskier territory.

Nissan has reportedly done it too, and used-car giants like Carvana are approving buyers who make as little as $100 a week.

If all this sounds familiar, that’s because it is

During the housing boom of the mid-2000s, banks handed out mortgages to almost anyone, regardless of creditworthiness or income.

The inevitable collapse that followed triggered the 2008 financial crisis. I graduated from The Ohio State University in May 2008. I ultimately fought for low-salaried (we’re talking $20k a year!) editorial roles and administrative jobs, applying to the same entry-level positions writers and editors with decades of experience lined up to fill, too. But enough about me…

Auto loans are a smaller market, yes, BUT

The sector makes up around $1 to $2 trillion compared to mortgages’ $14 trillion. That’s still an enormous amount of money resting on shaky ground.

The warning signs are already here, by they way.

Auto loan delinquency rates are at record highs

In what excerpts claim are a “lingering consequence” of pandemic-era lending practices where borrowers were approved for loans far exceeding the value of the cars.

It wasn’t uncommon for buyers to owe $15,000 on a car worth $10,000 because they rolled negative equity into a new loan.

Layer Ford’s latest push on top of all that, and the foundation starts looking more like a house of cards.

There’s also the affordability crisis

With new vehicle prices soaring, lenders and manufacturers are stretching loan terms out to 84 or even 96 months. And in rare cases, a decade…just to make monthly payments look palatable.

Pair that with rock-bottom interest offers for high-risk borrowers, and the industry is setting itself up for a wave of “first payment defaults.” That’s where buyers never even make the first payment.

We’re looking at a potential flood of nearly-new trucks hitting auction lots as repossessions climb.

Ford isn’t alone, but its status as a major player makes this especially significant

The company is chasing short-term gains, hitting quarterly targets and moving metal. Even if it risks long-term fallout. Over the next two to five years, analysts expect to see rising repossessions and an influx of low-mileage used vehicles as many of these loans implode.

Ford may win the quarter, but history suggests they’ll pay the price later. After all, we’ve seen how this story ends. This time, the crash might come on four wheels instead of under a roof.