Auto Financing Riding Increase in Subprime Lending to New Growth

As the American auto scene continues to recover and grow, the auto finance sector evolves and grows with it. Now, observers of this sector are saying that it is the reemergence of the subprime auto loan market that is driving much of this growth.

Talking about just that, Michael Binz, managing director and business leader of ABS Ratings, said, “An increasing portion of the auto finance market today is coming from the growth and reemergence of the subprime sector. With this growth, new issuers are coming into the markets as well as significant new sources of funding, with the private equity presence growing significantly.”

While Erkan Erturk, senior director of structured finance research at S&P, agrees that the subprime growth has been strong, he feels that pent-up demand will be what drives future auto sales. Speaking about this pent-up demand, double-E said, “We are not at the level where it could be… [More] pent-up demand will be coming our way and we will see the impact on sales in a positive way in the next few years.”

Whatever the cause for this deeply-needed growth in car loans with bad credit, it seems as if it shall continue.