Goeasy Stock Plummets 60% After Car Loan Losses Surge Amid Credit Risk Warnings

Goeasy Ltd., a leading Canadian subprime lender, saw its stock fall 60% in early trading after reporting a significant spike in credit losses tied to its auto loan book. The company disclosed that net losses from its consumer lending segment rose to CAD 185 million in the fourth quarter of 2025, up from CAD 56 million in the same period the prior year. This surge was driven by a rising default rate of 6.8% on its subprime car loans, up from 4.2% in Q4 2024, amid tightening household budgets and elevated interest rates. The deterioration in credit quality comes at a time when Canadian auto loan delinquency rates have climbed to their highest levels since 2018, according to internal data. Goeasy’s investments in alternative credit models and fintech infrastructure failed to offset the strain, as non-performing loans in its portfolio increased to 8.3% of total auto loans, up from 5.1% a year earlier. The company attributed the trend to increased defaults among borrowers with limited credit history, many of whom took on loans during the 2022–2023 credit expansion. The stock decline has triggered broader market reactions, with financial equities across Canada and the U.S. showing increased volatility. Competitors such as BMO and GS have seen their consumer lending divisions reassessed, while high-yield credit spreads widened by 12 basis points on the day. Analysts now anticipate a potential repricing of risk in the subprime lending sector, with several downgrades issued to regional lenders with exposure to auto financing. The situation underscores the fragility of consumer credit growth fueled by low rates and loose underwriting standards in prior years. With inflation pressures persisting and central banks maintaining restrictive monetary policy, lenders face mounting pressure to tighten risk controls, potentially curbing access to credit for lower-income borrowers.