Is the rise in auto loans a concern?

The rapid growth of auto loans in recent years has prompted claims that the next unsustainable debt bubble is emerging. For now, however, there appears to be little cause for concern. Although the nominal dollar value of auto loans outstanding is above its pre-recession level, the loans to disposable incomes ratio remains below its 2007 level. The latter is a much more important gauge of the ability of households to sustain their debts. In addition, interest rates are considerably lower than they were before the recession, which makes it even less likely that we will see a surge in auto loan defaults any time soon.