As U.S. auto sales have surged to a near-record level, a growing chorus of critics have suggested the boom is being fueled mainly by sales of new vehicles to buyers with subprime credit ratings.
Now, new data from Equifax shows the fear of a subprime car sales boom is unfounded; there is no bubble in auto sales to those with a weak track record of paying their bills in time.
"I don't see a bubble in subprime lending," said Dennis Carlson, Deputy Chief Economist for Equifax. "We're not seeing a spike in subprime loans."
Carlson and analysts at Equifax ran the numbers on auto financing for new and used cars in the first quarter of this year. Their conclusion: the percentage of auto loans being written for subprime borrowers has increased slightly but not by enough to be concern.
In the first quarter of this year, 23.9 percent of the 6.66 million auto loans issued went to those with subprime credit profiles, according to Equifax. This was a slight uptick from 23.2 percent in Q1 of last year and in increase of just 3.9% from 2010 when auto sales bottomed out in the U.S.
"We have a very healthy auto lending market right now," said Carlson. "Lenders are doing a better job."