The subprime market showed very positive signs during the first half of 2013, and Manheim economist Tom Webb believes there is good reason to expect a continuation into 2014.
Buy here, pay here dealers contributed significantly to the results as they made more longer-term financing options available to less-qualified buyers. Finance companies are also taking advantage of the increased demand that’s being fueled by improvement in recent employment numbers.
Although Webb was upbeat about current conditions in the market, he also warned that there is some concern about extending financing to consumers with lower credit ratings. The demand for used vehicles combined with the willingness of lenders to take bigger risks is contributing to the formation of a bubble.
Webb acknowledges that the market usually experiences cycles, but says he expects conditions to stay favorable for buyers, retailers and lenders for at least another year or more before restrictions start creeping in and slowing things down.
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