One month ago, when discussing the “perfect storm” hitting the US auto market, we showed that according to Fitch “More Americans Can’t Afford Their Car Payments Than During The Peak Of Financial Crisis”…
… which was to be expected: after all the latest consumer credit report from the Fed revealed an exponential spike in the amount of new car loans, which increased by more than $2,000 in one quarter, from just over $38,000 (a record), to $40,155 (a new record).
And yet something just didn’t click: if so many subprime Americans were saddled with record amounts of auto loans – on average more than $40K – where were the defaults? After all, the average loan rate for new car loans just hit a 13 year high and will soon rise to the highest level this centiry.