Larry Dixon, senior manager of market intelligence at NADA Used Car Guide, dissected the possible storm cloud building that could rain on the auto finance parade that’s been marching nicely for more than four years now.

While outstanding auto receivables haven’t passed the $1 trillion threshold, Dixon referenced Federal Reserve data that shows student loan debt already reached $1.15 trillion in the fourth quarter last year, up 7 percent from a year earlier and a “whopping” 111 percent higher than Q4 of 2007 when the figure stood at $548 billion.

Dixon calculated that student loan debt exceeded auto debt by 21 percent at the end of last year, and “the ongoing increase in college loan balances could play a role in dictating demand for new and used autos in the future,” he added in a blog post.

While there appears to be some possible turbulence on the credit horizon because of student loans, Dixon maintained that current auto finance conditions are on “stable” ground.

“The below-prime share of originations is reasonable, delinquencies are still low and lenders and consumers are eager to do business with one another,” Dixon said.

Dixon acknowledged some market negatives, however, elaborating on a point Manheim chief economist Tom Webb mentioned, too.

“While rates remain near historic lows today, they will be on the rise ― albeit at a slow pace ― before too much longer,” Dixon said. “Higher rates along with faster depreciation and longer loan terms will negatively affect equity position.

“In addition, the rise in outstanding debt, buoyed in part by the growing number of vehicles financed, means lenders have more skin in the game than they did a few years ago,” Dixon continue. “This places more cash at risk should borrowers default.”

With all of these factors combining together, Dixon discussed what might happen next, asking whether consumers “saddled” with college debt be forced to buy more inexpensive new vehicles, or will they gravitate toward pre-owned ones?

“While we’ll probably have to wait and see how this one plays out, we can say with greater confidence that college debt, which is now second in size to mortgage debt, will have an impact on spending,” Dixon said.

“All in all, a favorable credit environment should continue to help fuel auto sales for some time to come; however, it would probably be wise for lenders to pay keen attention to collateral risk and portfolio performance today to mitigate future liability,” he continued.

“As time management guru Alan Lakein once said, ‘Planning is bringing the future into the present so that you can do something about it now,’” Dixon went on to say.