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Increasing numbers of Americans are being left behind car paymentMimicking the trend typically seen at the beginning of major economic recessions.
According to a report seen by the CFA, 1.73 million vehicles were recalled last year, the highest number since the 2008 financial crisis. wall street journal,
“Crime, delinquency and foreclosure have increased in recent years and look worryingly similar to trends that were evident before the Great Recession,” the report said.
Delinquency, which implies delay in loan repayment, can destroy investor confidence and worsen the economic situation. crash,
According to data analysts JD PowerNearly one in seven car buyers has a credit score below 650. This is the highest level of people with low credit scores taking out car loans since 2016.
Meanwhile, CFA analysis says the number of subprime auto loans that are at least 60 days delinquent has hit a record high of 6 percent.
“These are borrowers who may have stretched their budgets to afford higher payments because of the higher asset price as well as the interest rate,” said Joel Scally, economic policy adviser at the Federal Reserve Bank of New York. wall street journal,
Other than this, car prices According to another CFA report, prices are higher than ever, with the average vehicle selling for about $50,000. Rising prices often mean that car payments are one of the highest bills families pay.
This has resulted in one in five new car buyers having a loan of up to seven years.
Report sent to members of congress According to the document, the outstanding amount of auto loans owed by Americans reached $1.66 trillion on September 10.
It added that “the nation’s federal watchdogs – the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) – have taken significant steps to monitor and enforce predatory practices in the auto market.”
White House spokesperson Kush Desai dismissed concerns of a decline in the auto industry, saying USA Today That “President Trump’s economic agenda of tax cuts, deregulation, tariffs, and energy abundance” will make voters more financially secure.
The CFA report also claims that the FTC “has not brought a single case against a car dealer since Trump installed its new leadership, and the Commission has declined to appeal the Fifth Circuit Court of Appeals’ decision striking down the hugely popular, cost-saving CARS rule.”
The CARS rule would have banned bait-and-switch tactics by dealerships and, according to the FTC’s own data, could have saved consumers $3.4 billion per year.
This week, a majority of members of the Federal Reserve’s interest rate-setting committee supported additional cuts to its key interest rate in 2025, according to a associated Press Report.
Most Fed officials felt the risk of rising unemployment has worsened since their last meeting in July, while the risk of rising inflation “has either diminished or not increased,” the minutes said. As a result, the central bank decided to cut its key rate by a quarter point to about 4.1% at its September 16-17 meeting, its first cut this year.
Rate cuts by the Fed could gradually lower borrowing costs for things like mortgages, auto loans and business loans, which would lead to more spending and hiring.
Still, the minutes underlined the deep divisions on the 19-member committee between those who feel the Fed’s short-term rates are too high and are hurting the economy, and those who point to persistent inflation that remains above the central bank’s 2% target as evidence that the Fed needs to be cautious about lowering rates.
Independent The FTC has been contacted for comment.