Auto loan delinquencies have soared to their highest point since the Great Financial Crisis, signaling a growing financial crisis for many Americans. According to the Wall Street Journal, this alarming trend is driven by mounting financial strain, with rising interest rates and inflation making it harder for consumers to stay current on payments.
Auto loan delinquency rates are at their highest in more than a decade, per WSJ: pic.twitter.com/HzL9htP4Hp
— unusual_whales (@unusual_whales) January 3, 2025
The Federal Reserve Bank of New York revealed that 4.6% of outstanding auto debt was at least 90 days delinquent in the third quarter of 2024—an alarming jump from previous years. This marks the highest delinquency rate since early 2021, highlighting the severe challenges consumers are facing in managing car payments.
The surge in delinquencies is fueled by a combination of high vehicle prices, despite a slight drop from pandemic-era peaks, and sharp increases in interest rates, which have made monthly payments significantly more burdensome. Subprime borrowers, in particular, are struggling the most, as they face even higher rates due to their lower credit scores.
Sources:
https://www.wsj.com/articles/auto-loan-delinquencies-skyrocket-to-highest-level-since-gfc-2024-01-03
https://www.bankrate.com/loans/auto-loans/subprime-auto-loan-delinquencies-surge/
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