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Subprime Auto-Loan Titan Defends Longer Terms as New Normal

Bloomberg business news

(Bloomberg) -- Thomas Dundon, board member at Santander Consumer USA, discusses subprime auto debt and the risk of a new bubble forming as the Federal Reserve prepares to hike interest rates. He speaks on "Bloomberg Markets." (Source: Bloomberg)

The man who created one of the biggest U.S. subprime lenders says there’s nothing dangerous about borrowers being given longer car loans.

When Thomas Dundon helped start the lender that’s become Santander Consumer USA Holdings Inc. in the 1990s, subprime borrowers typically were offered four-year car loans, he said Monday in an interview. Now, the standard is six years, he said, partly because wages haven’t kept up with vehicle prices.