Overview

• Americans are struggling with car payments at the highest rate in decades due to economic tightening and rising interest rates, with 6.11% of subprime borrowers more than 60 days past due on their auto loans.
• High inflation and the cost of vehicles continue to exacerbate the issue, with the average cost of a new car around $48,000, significantly higher than pre-pandemic levels.
• New and used car prices surged during the pandemic, with fewer small cars and more expensive trucks and SUVs being sold, resulting in larger loans for consumers.
• Repossessions are expected to rise, with an estimated 1.5 million vehicles predicted to be seized by the end of 2023, up from 1.2 million the previous year.
• The rise in delinquencies is worrisome as it could lead to more widespread defaults and potentially a recession, as predicted by investor Bill Gross.