We have been dutifully tracking the auto sector, considered a leading economic indicator, to pinpoint the arrival of the crushing auto loan crisis and even the possibility of the onset of the next recession. In late January, we cited data from Fitch that revealed consumers are falling behind on auto payments – the most since the peak of the Great Financial Crisis. Fast forward nine months later, to September, that rate just hit the highest level in nearly three decades.
In what could be the beginning innings of the auto loan crisis, something we called a “perfect storm” earlier this year, Bloomberg cites new Fitch data:
The percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.11% in September, the highest in data going back to 1994, according to Fitch Ratings.
“The subprime borrower is getting squeezed,” said Margaret Rowe, senior director with Fitch.
Rowe said, “They can often be a first line of where we start to see the negative effects of macroeconomic headwinds.”
What has been widely known is the consumer has been funding car purchases with even more debt to afford record-high prices, with many monthly payments exceeding $1,000. Factor in the Federal Reserve’s most aggressive interest rate hiking cycle in a generation, elevated inflation, and the restarting of the federal student loan payments, tens of millions of consumers are under immense pressure this fall.
If you have one Paid for . KEEP IT !!! New Junk is too Expensive !!
Same for Mortgages !!! If you have one KEEP IT !!!! New rates Tooooo HIGH !!!!! FACT
The plethora of luxury cars out there with bling is epic.
People without sufficient incomes to support a 401k are buying these.
They can’t afford them and they’ll have no future income.
No sympathy for these stupipo!
Don’t buy ELECTRIC JUNK !!! Overpriced & will cost you More !!!!
It would be interesting to see the delinquency numbers by make, model and year.
Glad I have NO auto payments anymore !!!! LOL LOL