Auto loan originations, total debt outstanding, and the share of subprime borrowers are on the rise, according to Manheim Chief Economist Jonathan Smoke’s Industry Insights.
Even with more cars being sold and the percentage of those sales coming from subprime borrowers increasing, the default rate for auto loans is at a 13-year low.
This bodes well for a healthy car market, as it means that not only are more people buying cars, but that the people who are buying cars can afford to pay them.
"Under these conditions, demand should continue to be strong for vehicles," said Smoke.
Households have also set a new nominal record for debt. This, the report added, is a sign that consumer confidence is high and that credit is readily available. However, it is not just debt that is on the rise.
"While debt is growing, it is commensurate with growth in the economy," said Smoke.