Record High Delinquency Rates on Auto Loans Amid Economic Tightening

Surge in Late Car Payments Fueled by High Inflation, Rising Interest Rates and Expensive Vehicles, Posing Risks of Widespread Default and Recession

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.