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Researchers find no evidence of subprime auto lending bubble

Posted on Monday, June 29, 2015 at 8:57:55 PM

As auto lending has surged, there have been concerns floated about a subprime auto sales bubble. However, experts recently found that such worries could be unfounded. 

Analysts studied auto financing for new and used vehicles thus far this year. Looking at the numbers, experts found that there is no reason to fear a subprime auto lending bubble. Researchers found 3.3 percent of subprime loans were seriously delinquent last May, down slightly from the same month in 2014. 

"I don't see a bubble in subprime lending," Dennis Carlson, deputy chief economist for Equifax, explained. "We're not seeing a spike in subprime loans."

There are more loans extended these days with 0 percent financing, which is part of the reason some fear a subprime auto loan bubble. However, this auto financing is typically only extended to borrowers with non-prime and higher credit scores. 

Equifax researchers ultimately found the auto industry to be relatively healthy, and that's good news for borrowers and lenders alike right now.