More Americans Are Behind On Their Car Payments Than Ever Before

The American automotive marketplace is showing signs that dire straits are ahead that the percentage of Americans at least 60 days behind on their car note is at its highest in recorded history. In January the share of subprime auto borrowers (those with a credit score below 640) crept up to 6.56 percent, the highest in history, and while February numbers haven't been tabulated yet, it's expected to get worse, not better. With a dramatically slowing early Trump economy, inflation leading to sky high new car prices, longer loan terms, higher monthly payments, more negative equity, and stagnant wages, it seems that auto loans are getting kicked to the side in order to pay for life's other necessities these days. 

Well over 100 million Americans are saddled with a monthly car payment, up from just 81.4 million in 2010, and with the average new car payment an incredible $737 and used cars up above $520 per month it's a serious amount of debt, according to Bloomberg. The majority of Americans don't have $1,000 in savings, turning any minor economic emergency into a catastrophe that might require skipping a car payment or two. Total American auto loan debt is also at its highest in history with more people than ever borrowing more money than ever, hitting 1.65 trillion dollars, more than doubling since 2014. 

"The lower income level has been really affected, and we expect that to continue to be the case this year," said Mike Girard, senior director for asset-backed securities in North America for Fitch Ratings told Bloomberg. "There's still the continued impact from higher inflation and interest rates."

Bloomberg does expect some of this to ease slightly in March as we get farther away from the holiday spending season that tends to inflate January and February car payment delinquencies, while March and April see some of the past-due bills get caught up with tax return money. It's possible, however, that this year will prove different with dramatically increased consumer debt and dramatically decreased consumer confidence, compounded by a lot of tariff and trade war uncertainty from the new administration. By a lot of indicators, this is the worst that the American economy has ever been, and things don't look to be improving any time soon. Now might be a good time to shore up your accounts, folks, we're in for a bumpy ride.