A Record High of Americans Are Struggling to Keep Up with Their Car Loans | Carscoops

      Many consumers are securing car loans that they are unable to repay.

      

       8 hours ago

       by Brad Anderson

      

      More than 6% of subprime auto borrowers are at least 60 days overdue on their loans.

      Approximately 3% of car loan borrowers are 90 days or more late with their payments.

      Factors contributing to this situation include a slowing economy, inflation, record-high new car prices, and large loan amounts.

      Many Americans find affording a car loan increasingly difficult, with missed payments reaching levels unseen in over 30 years. Data from Fitch Ratings indicates that car owners are falling behind on their monthly payments at a rate higher than any time in the past three decades—an alarming indication of increasing financial pressure.

      The statistics show that 6.56% of all subprime auto borrowers were at least 60 days behind on their loans in January. Moreover, the share of car borrowers who are 90 days or more past due has risen to 3%. Although February figures have not yet been published, it is typical for delinquencies to rise in January and February before decreasing in March and April.

      Read: Nearly 20% Of Car Buyers Took On $1,000+ Monthly Payments In Q4

      These concerning statistics apply only to individuals with credit scores of 640 or lower. Those with higher credit ratings are significantly more likely to keep their payments current. In January, only 0.39% of prime auto borrowers were at least 60 days overdue.

      Several elements contribute to this situation. Economic growth began to decelerate towards the end of Joe Biden’s presidency, and this pattern has persisted into the early days of the Trump administration. Continual inflation is also impacting many consumers financially, while new car prices remain nearly at record highs, compelling numerous buyers to take on substantial loans that many are unable to handle.

      "The lower income bracket has been significantly impacted, and we anticipate this trend will persist throughout the year," stated Mike Girard from Fitch Ratings to Bloomberg. "The effects of rising inflation and interest rates are still ongoing."

      In the last quarter of 2024, the average amount financed for new vehicle purchases in the U.S. rose to $42,113. Among those engaged in new-car loans, 18.98% are facing payments of $1,000 or more. Furthermore, the average loan term in Q4 2024 climbed to 68.8 months, and the average monthly payment overall increased to $754.