Americans Can’t Afford Car Loans, 1.5 Million Cars To Be Repossessed In 2023

– The number of Americans facing vehicle repossession is increasing at a record pace.

– Car loan delinquencies have been rising for several consecutive quarters.

– Banks, credit unions, and lenders are tightening underwriting standards on new and used vehicle loans.

– The average car loan interest rate is currently 9%, with rates ranging from 5% to 21% based on credit score.

– The average car payment is $729 per month for a new car and $528 for a used car.

– The increase in auto loan delinquencies is due to higher rates and higher car prices.

– The percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.1% in September, the highest in data going back to 1994.

– The car market has reached a point of equilibrium, so there is no motivation for automakers or dealers to reduce prices.

The number of Americans facing vehicle repossession is increasing at a record pace due to rising car loan delinquencies and higher interest rates. Banks, credit unions and independent lenders are tightening underwriting standards on new and used vehicle loans to minimize losses due to charge-offs. The average car loan interest rate is currently 9%, rising to 11.38% for used cars and 6.63% for new cars. The increase in vehicle prices is due to multiple reasons, including global supply chain issues, chip shortages and rising input costs. The percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.1% in September, the highest in data going back to 1994. The percent of borrowers who are at least 60 days past due on their car loans is at the highest level in three decades, and estimates suggest that 1.5 million vehicles are likely to be seized this year. Despite this, Edmunds believes that sales prices have stabilized and have been heading slightly downward since January, with the average discount increasing from $15 to $714 in July. However, there is no motivation for automakers or dealers to reduce prices as supply matches demand, and the used vehicle market is expected to remain tight.

Bullet Summary:

– Rising car loan delinquencies causing increase in vehicle repossession

– Banks, credit unions and independent lenders tightening underwriting standards

– Average car loan interest rate is 9%, rising to 11.38% for used cars and 6.63% for new cars

– Increase in vehicle prices due to multiple reasons, including global supply chain issues, chip shortages and rising input costs

– Percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.1% in September

– Edmunds believes sales prices have stabilized and there is no motivation for automakers or dealers to reduce prices

– Used vehicle market expected to remain tight