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Auto financing: Wall Street is turning out more car loans

The auto lending business is all revved up, thanks to Wall Street.

More auto loans and leases are being cranked out at banks like JPMorgan Chase and Wells Fargo at a time when consumers are piling on more debt — and lengthier loans — to cover new and used car purchases.

JPMorgan saw auto loan and lease origination volume jump by 9 percent year over year, to $8.5 billion, the bank reported in its second-quarter earnings. Overall, the bank said its auto loans and leases rose 17 percent year over year. Wells Fargo also showed an increase in auto originations, with a 2 percent rise year over year and an 8 percent increase from the first quarter of $8.3 billion, it announced in its earnings Friday.

The total dollar amount lent to car buyers eclipsed the $1 trillion mark earlier this year, and it remains to be seen whether anything can stall growth in auto loans at a time when borrowing costs consumers so little.

JPMorgan CFO Marianne Lake said Thursday on the bank's earnings call that it has "maintained our underwriting discipline with average FICO scores." Later on the call, when pressed for specifics by an analyst who asked if JPMorgan had applied consistent standards to its auto lending, Lake said only that it has focused on consumers with "very high" scores.

Industry loan average: more than $30,000

Race car
Australian Scenics | Getty Images

Auto loans aren't the only thing that's growing; their size and duration are on the rise as well this year, according to data from Experian. The average monthly payment, around $500, is up to a record mark, according to a June report from the firm, and the industry's average loan size for new cars is also at an all-time high, having eclipsed the $30,000 mark.

The average U.S. transaction price for new, light vehicles was $33,652 in June, according to automobile price-tracking firm Kelley Blue Book.

The Experian report also highlighted that the average credit score for a new car loan borrower, at 710, has fallen slightly from the prior year.

The auto lending business has been juiced in part thanks to companies like Uber and Lyft, which hire new drivers and thereby push new buyers to car companies, such as General Motors.

But even leadership at the big banks pouring more cash into auto loans has wondered how long the car sales rally can continue.

Speaking at a New York conference last month, JPMorgan CEO Jamie Dimon issued a warning on auto lending, saying that "someone is going to get hurt" on loans.