Record number of Americans are 90 days behind on car payments


Jonathan Alcorn | Bloomberg | Getty Images

As car loan debt has soared, the number of people unable to pay has increased, with the level of serious delinquencies surpassing the highs reached just after the financial crisis.

More than 7 million Americans were 90 days or more behind on their auto loans at the end of 2018, according to data released Tuesday by the Federal Reserve Bank of New York. That’s more than a million more than the peak in 2010, as the country recovered from its worst downturn since the Great Depression.

“The substantial and growing number of troubled borrowers suggests that not all Americans have benefited from the strength of the labor market and warrants continued monitoring and analysis of this sector,” Fed economists said in a statement. report that accompanied their quarterly review of US consumer debt.

The surge in delinquencies was accompanied by a $584 billion increase in total auto loan debt, the largest increase since the New York Fed began tracking 19 years ago.

On the positive side, the overall level of overall credit quality has actually improved, with those at the bottom of the scale declining to 22% of the total share, while 30% of the $1.27 trillion of total auto debt are now held by those on the higher end of the scale.

These numbers “would suggest that the overall stock of auto loans is the highest quality we have seen since our data began in 2000. However, with the growth in auto loan participation, there are now more borrowers from subprime auto loans than ever, and thus a larger group of high-risk borrowers delinquent,” the report said.

Debt issued by auto finance companies, rather than at the dealership level, is responsible for most of the growth in less qualified borrowers. Of total auto finance debt, 6.5% was past due in the fourth quarter.

The flow of debt that slipped into the 90-day arrears category increased slightly to 2.4% in 2018 from a low of 1.5% in 2012.

Overall household debt rose $32 billion, or 0.2%, to $13.54 trillion in the fourth quarter. That’s $869 billion above the crisis peak of $12.68 trillion and 21.4% above the post-crisis low point in the second quarter of 2013.

Student loan debt rose slightly to $1.46 trillion while credit card balances hit $870 billion, just around their crisis peak.

Generally, however, Americans were less debt-hungry than in the past: Credit applications fell to their lowest level in Fed survey history, mainly due to a drop in applications of refinancing.


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