Auto Loan Debt Is In The Trillions—Defaults Climb to Crisis Levels
America’s love affair with new cars is colliding with a financial nightmare. According to a new report from the Consumer Federation of America (CFA), total U.S. auto loan debt has ballooned to an eye-watering $1.66 trillion, while delinquencies, defaults, and repossessions surge at rates not seen since before the 2008 financial crash.
Key Points
- U.S. auto loan balances have surged to $1.66 trillion, with delinquencies, defaults, and repossessions climbing at rates unseen since before the 2008 financial crash.
- The average monthly payment is now $745, with nearly 20% of buyers paying over $1,000 per month, straining even borrowers with above-average credit.
- Rising delinquencies suggest broader financial stress, as many Americans prioritize car loans over essentials, raising concerns of ripple effects beyond the auto market.
Monthly Payments Crushing Consumers
The CFA’s study, Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies, paints a bleak picture. The average monthly car payment now sits at $745, while nearly one in five buyers are saddled with bills over $1,000 per month. Rising interest rates and high sticker prices are the main culprits, and with the $7,500 EV tax credit set to vanish soon, costs could climb even higher.
What’s different this time is that the pain isn’t confined to subprime borrowers. Even buyers with above-average credit scores are defaulting at double the pre-pandemic rate. Younger drivers are especially vulnerable, and repossessions across all age groups jumped by 43 percent between 2022 and 2024.
Broader Economic Red Flags
The CFA warns that the crisis could extend far beyond missed car payments. Because many Americans prioritize car loans over essentials like housing and healthcare, surging delinquency rates may be a signal of deeper instability across the wider economy.
"For the vast majority of Americans who rely on cars for commuting, education, and essential services, auto loans are not a luxury—they are a lifeline. Going into debt to buy a car is often unavoidable: Americans need cars to survive, yet excessively high prices require many car buyers to finance their purchase with expensive loans." The CFA said.
“Now is the time for policymakers to take a hard look at the auto lending market to call out exploitative practices,” with the CFA urging Congress and regulators to step in.
Cars, Choices, and Consequences
Financial experts suggest that drivers could avoid getting trapped in sky-high loans by looking to the used market, rather than chasing new models with eye-popping monthly payments. As the CFA outlines, Americans are dependent on cars for economic and personal success. Despite the additional debt, a new car can often provide peace of mind with the promise of mechanical soundness and a factory-backed warranty.
Regardless, America’s auto debt problem isn’t just about cars—it’s shaping up to be a major economic warning sign.
This article was co-written using AI and was then heavily edited and optimized by our editorial team.
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