More Americans, especially those with lower incomes, are struggling to make car payments, as inflation, higher interest rates, and job market difficulties put pressure on household budgets. Subprime auto loan delinquencies have reached nearly 6.5%, a record high, and repossessions are rising. Lenders like CarMax and Ally Financial are warning investors about worsening loan performance.
Given how essential cars are to most Americans, and their ability to work, the rise in delinquencies is particularly concerning.
Pandemic-era financial benefits—such as stimulus checks and paused student loans—are gone, while prices and borrowing costs remain high. And more borrowers are “under water,” owing more than the value of their cars.
