If people can’t afford to make their car payment, how will they cover their rent or mortgage payments?

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Subprime Auto Loan Delinquencies Erupt Highest Rate On Record (Higher Than Great Recession)

Bidenomics favors the top 1%, leaving the 99% struggling with low-wage jobs. A severe auto loan crisis looms, with delinquencies at a decades-high. Consumers face crushing debt and economic pressures, and a potential 2024 recession could worsen things. The Fed’s interventions are further destabilizing an already shaky economy.

Americans Are Overdue With Their Car Payments At Highest Rate In Nearly 30 Years

“Higher car prices and rising interest rates are hindering car owners’ ability to afford their vehicle payments, as 6.1% of subprime auto borrowers are at least 60 days past due on their loans, the highest percentage in data dating back to 1994, according to Bloomberg, which cited Fitch Ratings.

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Key Facts
The 6.1% of borrowers behind on auto loans last month marks a surge from the 2.6% reported in May 2021, after the federal government significantly lowered interest rates in the wake of the Covid-19 pandemic.

Higher vehicle prices and borrowing costs—along with continued higher than usual inflation—have fueled the rising number of Americans behind on their auto loans, a problem that might persist given forecasts from Federal Reserve officials who believe high interest rates will continue through 2026.

Margaret Rowe, a senior executive at Fitch, told Bloomberg subprime borrowers can be the first indication of “where we start to see the negative effects of macroeconomic headwinds.”

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Generation Z and millennials may account for a significant amount of the borrowers behind on their auto loans, as the two generations recorded auto loan delinquency rates last year that were significantly higher than pre-pandemic levels, according to an NBC News report that cited TransUnion.

Interest rates for used cars are 13.5% on average for those with fair credit but can rocket up to around 21% for those with the worst credit, according to Bankrate.”

Subprime Auto Loan Delinquency Erupts, Reaching Highest Rate On Record

Credit Card Delinquency Rate Hits Record

 

h/t Simian_Stacker