Analysts predict auto loan delinquencies will keep rising into 2024.
David Zalubowski/AP
A record number of subprime borrowers are more than 60 days behind on auto loan payments.
The ratio was 6.11 percent in September, according to Fitch Ratings figures published by Bloomberg.
The number of vehicle seizures is also increasing, leaving many people without a means of transportation.
This is a machine translation of an article from our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
According to data from Fitch Ratings, about the Bloomberg reported, a record number of subprime borrowers are 60 days or more behind on their auto loan payments.
The rate reached 6.11 percent in September – the highest since records began in 1994 – up from 5.93 percent at the beginning of the year.
Analysts predict that the auto loan delinquency rate will continue to rise through 2024, reaching a peak of about ten percent before beginning to decline (CNN).
The high delinquency rates suggest that many low-income workers in particular are struggling amid persistently high inflation, a difficult job market and resuming federal student loan payments after a pandemic freeze.
The high interest rates are also having an impact, so many are resorting to loans to cope with the situation. In the second quarter of this fiscal year, credit card debt exceeded for the first time in the History of the NY Fed Survey the limit of a trillion dollars.
Although delinquency rates do not necessarily indicate a recession, they are often a reflection of a struggling economy.
Margaret Rowe, senior director at Fitch, told Bloomberg: “Subprime borrowers are being squeezed. They are often the first where we can see the negative impact of macroeconomic headwinds.”
According to Experian-Studie More than a third of Americans are considered subprime borrowers, meaning they have lower credit scores and are considered less likely to be able to meet their loan repayments. As a result, they typically have to pay significantly higher interest rates.
For subprime borrowers, interest rates on new cars are high Experian at an average of 11.5 percent and for used cars at 18.5 percent. Prime borrowers pay significantly less – an average of 6.4 percent and 8.75 percent, respectively.
Those unable to make payments face having their cars impounded and often have great difficulty getting to work. Dem World Economic Forum According to 2022, only 11 percent of U.S. commuters will use public transportation.
Cox Automotive, a leading automotive company, predicts that 1.5 million cars will be impounded this year – 300,000 more than in 2022.
However, the increasing number of car loan delinquencies is not deterring some consumers. A record number of new car buyers took part in the three months to June Loans with monthly payments of $1,000 or more, according to Edmunds data.
For young people in Generation Z and Millennials, car payments have become one of the largest expenses, even exceeding their rent.
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