Edward Niedermeyer writes for the Federalist website that auto loans might be facing as much of a bubble problem as student loans.

Behind the front-page investigations and populist political platforms, the numbers are indisputably chilling: student loan balances have surged from less than $18,000 per person to $25,000 per person in the ten years since 2005. But another class of debt is also growing at troubling rates without attracting anywhere near the same level of attention: car loans.

While American consumers have reduced their overall debt in the years since the Great Recession, car loans have grown at roughly the same rate as student loans, according to The St. Louis Federal Reserve. Together, loans for cars and education contributed 90 percent of the growth in consumer debt since the end of 2012. Outstanding auto loans have hit more than a trillion dollars, with an average balance of $12,000 per person (or nearly 8 percent of disposable income), while the dreaded student loans “epidemic” is not far ahead at $1.3 trillion outstanding.

When the media does obliquely cover the rise of auto loans, it’s usually under the rubric of praising “booming new car sales” in the wake of the auto bailout. This fits nicely with the narrative that the auto industry rescue drove a strong recovery in new car demand, which in turn has lifted the broader economic recovery. This ignores that new car loans, not the cars themselves, have become the new hot product and that Wall Street, not car-loving Americans, is the real market.

Auto Asset Backed Securities (ABS), securitized bundles of car loans not unlike the mortgage-backed securities at the heart of the 2008 credit crisis, are the hidden driver of the auto debt boom. In the first two months of 2016 lenders issued $17.69 billion in new auto ABS compared with just $1 billion in credit card debt-backed ABS and $600 million in student loan-backed ABS. With subprime auto loans growing faster than the regular market, the return on these investments are improving even as the risk grows.