Risks? Yes. Systemic risk? Not so fast
by Claudia Assis and Rachel Koning Beals
More buyers who borrow to purchase used cars may find themselves overextended with a loan that stretches well beyond their fast-depreciating vehicles’ best years, industry watchers have warned.
These concerns, and a run-up in sales, have placed a lot of attention on the auto-loan market this year. The word “bubble’ has been floated. Could some borrowers get hurt in deteriorating conditions? Yes. Lenders, too. In fact, J.P. Morgan Chase CEO Jamie Dimon has addressed auto-loan risk at least two times in as many months, and as recently as last month he called the market “a little stretched.”
Still, the auto-loan market is far from the powder keg that the mortgage market was when the globe plunged into a financial crisis eight years ago, according to loan and credit experts.