Subprime finance continues to get a lot of bad press and talk of an auto finance bubble continues.
But the numbers doesn’t seem to support these claims.
“We don’t see any cause for major concern,” said Gunnar Blix, Equifax’s deputy economist.
Equifax’s data does show rising delinquencies, but Blix said that reflects a broadening of consumers being financed.
Not all finance sources are expanding, however.
Blix said banks, captives and credit unions continue their year-long trend of tightening.
This shows in the latest results from major bank auto creditors like Huntington Bancshares Inc. and BB&T Corp., both of which reported lower charge-offs.
It’s the pure play auto finance firms that are driving most of the growth, Blix said.
This shows in the latest quarterly report from Consumer Potrfolio Services Inc. The company reported managed receivables totaled $2.343 billion as of June 30, an increase from $2.323 billion as of March 31, and $2.254 billion as of June 30, 2016.
Blix said these companies are better equipped to take on more risk.
“They know how to play in that space,” he said.
That said, banks and credit union actually have room to expand their auto finance offerings since they have been tightening while the economy continues to expand.
Ally Financial Inc. CEO Jeffrey Brown said in his company’s latest earning report that Ally sees just such an opportunity.
“In auto finance, we remain cautious but constructive,” brown said. “Used vehicle price declines and loss performance were well within our expectations, and we’re seeing improved profitability in both our consumer and commercial auto portfolios.”