A record number of Americans are behind car loans

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It is increasingly difficult for many Americans to afford their car loans. In fact, car owners are missing their monthly payments more frequently now than for more than 30 years, according to Fitch Ratings.

The data reveal that 6.56% of all risk borrowers at risk were at least 60 days due to their loans in January. In addition, the proportion of car borrowers who have 90 days or more due to 3%. The February figures have not yet been published, but it is quite common for faults to increase in January and February before falling in March and April.

Read: Almost 20% of car buyers took $ 1,000 + monthly payments in the fourth quarter

These disturbing figures are only for those who have credit scores of 640 and less. Those who have better credit notes are much more likely to be up to date with payments. Only 0.39% of borrowers of car bonus were at least 60 days in January.

There are several factors at stake here. Economic growth began to slow down towards the end of the presidency of Joe Biden and this trend continued until the early stages of the Trump administration. Inflation also continues to harm many consumers in the hip pocket, and the prices of new cars are close to the record heights, forcing many buyers to contract heavy loans that many simply cannot afford.

“The lower income level has been really affected, and we expect it to be the case this year,” Mike Girard from Fitch Ratings told Bloomberg. “There is always the continuous impact of inflation and higher interest rates.”

In the last quarter of 2024, the average amount financed for purchases of new vehicles in the United States reached $ 42,113. Among those who are locked in a loan for new cars, 18.98% are struggling with payments of $ 1,000 or more. In addition, the average length of loan in the fourth quarter of 2024 reached 68.8 months and the average monthly payment at all levels increased to $ 754.