If you think Britain is teetering on a cliff-edge of impossibly high personal debt, then the website of The Car Finance Company will confirm your worst fears. Maybe you don’t have a job and are on benefits. Maybe you are so hard up you can’t afford to put down a penny in deposit. Maybe your credit history is littered with arrears notices. Don’t worry – you can still drive away in a brand new Vauxhall Astra costing more than £16,000.

The Car Finance Company has helped shift 80,000 new cars, saying that the Vauxhall Astra is its customers’ favourite, with more than 14,000 sold. As the website says: “CCJs, IVAs, defaults or arrears. Employed, self-employed or on benefits. It only takes one minute to apply. All circumstances considered. No deposit required. Quick approval.”

But filings at Companies House last week have prompted critics to warn it is the proverbial canary in the coalmine. The latest accounts showed that the company’s impairments and arrears – where customers are not keeping up with payments – had doubled, with almost one in five falling behind. The accounts also revealed a loss of £17.8m, and that its US parent company had written off its £50m investment just two years earlier. The company did not respond to my calls, although staff at its sales desk said it is still very much a going concern.

The Bank of England's latest assessment noted that car finance is the fastest growing component of consumer credit

But it is beyond argument that easy credit has fuelled binge-buying of cars in Britain, with sales at record highs financed by a £31bn surge in finance packages last year alone. Undercover Daily Mail reporters posing as unemployed, on low wages or with a poor credit rating, revealed this week how they were offered £20,000 Audis, Vauxhalls and Fords.

Unlike The Car Finance Company, which sold relatively expensive loans, most of the finance packages are personal contract plans (PCPs), which tempt buyers with drive-away deals such as £180 a month for a £16,000 Peugeot and a downpayment of just three months (£540.) I know of one relatively low-earning, self-employed young man with a wife and child who has four new vehicles financed by these deals. One interesting insight into his psychology is that he rents and says he will never be able to afford to buy a home. So it’s not worth saving, he reckons, and more fun to indulge his passion for motors.

Will these loan packages turn into the next sub-prime disaster? The Bank of England’s latest assessment of the country’s financial position noted that car finance is the fastest growing component of consumer credit, rising at 15% a year. It said 80% of car buying is now through PCPs, but it’s modelling suggests they may not be the next crisis, as some are saying. It tested a fall in used car values of 30%, with PCP buyers handing back their cars in huge volumes, and even then the losses knocked just 0.1% off the capital ratios of British banks.

The Finance and Leasing Association is adamant that credit standards are being maintained, and that the hectic growth rates of recent years are levelling off. But one thing we learned from the financial crisis is that explosions happen in areas no one is scrutinising much, and in financial instruments that are untested. In the case of car finance, it’s not banks that are most exposed but the financing arms of the manufacturers, which, because they are not deposit takers, are treated differently by regulators.

A prudent regulator will always want to dampen down excesses. It’s probably time for the Financial Conduct Authority to introduce mortgage affordability-style rules on car finance, maybe applying income-multiple limits to purchases. It has worked on mortgages and can on car finance. The only other way to curb the car-led consumer credit explosion is to raise interest rates, which will then wreck the wider economy.