Headline Roundup • October 24th, 2023
More Americans Fall Behind on Car Payments Amid High Inflation
Summary from the AllSides News Team
A record number of Americans are falling behind on car payments, according to figures from Fitch Ratings obtained by some media outlets.
The Details: In September, 6.11% of auto borrowers were at least 60 days late on their car payments, the highest default rate in nearly three decades. Car repossessions have ticked higher in recent months as high prices for new and used cars have forced consumers to take out bigger loans. Cox Automotive has estimated that 1.5 million vehicles will be seized by the end of December, up from the 1.2 million cars seized in 2022.
Key Quote: "The subprime borrower is getting squeezed. They can often be a first line of where we start to see the negative effects of macroeconomic headwinds," said Margaret Row, senior director at Fitch.
For Context: In 2022, car prices surged amid global supply chain disruptions and a semiconductor shortage. Consumer demand, however, remained strong, and prices were driven higher.
How the Media Covered it: Some sources across the spectrum noted that overdue car payments are an ominous sign for the U.S. economy as inflation and high auto prices strain household budgets.
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David Zalubowski/AP
A record number of subprime borrowers are behind on their auto loan payments by 60 days or more, according to figures from Fitch Ratings reported by Bloomberg.
The rate hit 6.11% in September – the highest since records began in 1994, and was up from the 5.93% recorded at the start of the year.
Analysts predict that auto loan delinquencies will continue to rise into 2024 and peak at about 10% before they start to fall, per CNN.
The high rates of delinquencies indicate that many lower-earning workers in particularly are struggling amid...
Getty Images
Higher car prices and rising interest rates are hindering car owners’ ability to afford their vehicle payments, as 6.1% of subprime auto borrowers are at least 60 days past due on their loans, the highest percentage in data dating back to 1994, according to Bloomberg, which cited Fitch Ratings.
The 6.1% of borrowers behind on auto loans last month marks a surge from the 2.6% reported in May 2021, after the federal government significantly lowered interest rates in the wake of the Covid-19 pandemic.
Higher vehicle prices and borrowing costs—along with...
Kena Betancur / VIEWpress / File / Getty Images
A growing number of Americans are falling behind on their car payments, an ominous sign for the U.S. economy as high auto prices and stubborn inflation strain household budgets.
Car repossessions tumbled in the early days of the pandemic as the government sent trillions in stimulus money to American homes and businesses. But repossessions have progressively ticked higher as sky-high prices for used and new cars alike forced consumers to take out bigger loans.
In September, the percentage of auto borrowers who were at least 60 days late on their bills rose to 6.11%,...
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