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(EMAILWIRE.COM, March 02, 2012 ) Prescott, AZ -- Experian, one of the big 3 credit bureaus that include Equifax and TransUnion, has issued a report showing that the amount of outstanding debt increased in the 4th quarter of 2011 by $23.9 billion. That brings the total amount of outstanding debt to $658 billion in the auto industry, and the market is heating up in the auto loan niche.
Lenders have begun handing out loans to "subprime" borrowers, which is industry codeword for those borrowers with tarnished credit. Although this type of lending is what triggered the home mortgage bubble that finally popped in 2008, financial institutions believe that these loans will be paid back. So far, the gamble seems to be working: delinquency rates on loans improved in the last quarter of 2010 from 0.59% to 0.46%.
The next segment that lenders have targeted for growth is the used car market, which has traditionally been reserved for buyers with poor credit. However, as even new vehicles are offered to consumers in the subprime loan market, the used car market has opened up more to buyers from all income levels.
The big question, and one that remains to be answered, is whether car buyers will keep loan payments when the next recession hits.
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Source: EmailWire.com
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