Americans are struggling to pay off car loans

An alarming number of Americans with car loans are struggling to make monthly payments. Auto loan performance increased further in December, leading to an increase in bad debt. Of all the loans, defaults are at their highest since the financial crisis about 15 years ago.

Think back to last month. We pointed out that the auto sector is at risk of default as a credit default is imminent. The book was titled “Complete Storm: ‘Big Wave’ of auto foreclosures and loan defaults to cause stock market shocks, damage US economy.” It gives readers a road map and how the dominoes will fall in triggering what Tesla CEO Elon Musk recently warned: “It could happen, a lot of financial problems.”

New bone-chilling information via Cox Cars shed light on the major flaw in the auto loan market. According to the report, loans outstanding for more than two months increased by 5.3% and jumped to 26.7% from last year.

And here’s where the bells start ringing:

Of all loans, 1.84% defaulted, which was up from 1.74% in November and the highest since February 2009.

In December, 7.11% of small loans defaulted, up from 6.75% in the previous month. The crime rate was 163 percent higher than last year, and the month of December was the highest on record dating back to 2006.

Cox Automotive says that despite the increase in the number of people missing loan payments – it has not yet appeared in default:

Bad loans fell to 13.5% from November but rose to 16.9% from last year. The annualized interest rate on automobiles in December was 2.56%, which was lower than 2.98% in December 2019. The deficit in 2022 was 2.28%, from a low it was 1.98% last year but still lower than the 2.90% rate. in 2019.

And maybe the reason that debt hasn’t increased is that borrowers don’t think they can’t pay until they’re 90 to 120 days late because of insufficient payments. This may indicate that a bearish wave may emerge over the next few quarters as consumers sell off 20 months of negative real growth. , less personal finance, and more credit cards. Everyone who bought cars they didn’t need or could afford with +$1,000 monthly payments during Covid will be financially devastated when the next recession comes.

By Zerohedge.com

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