It doesn’t take too hard a look to realize the automotive industry in the United States is in a bit of a weird place. Not only are product plans and regulations seemingly in a state of constant flux, but the price of a new car has never been harder to swallow. In fact, according to a new report from the Consumer Federation of America, U.S. buyers currently owe more than $1.66 trillion in auto-related debts.
The auto debt situation is nothing new, as Americans on the whole are generally dependent on vehicles that are too expensive for most people to buy outright. Combine that with the fact that the average prices of both new and used cars are higher than they’ve ever been, and it’s no surprise people are forced into borrowing large sums. That said, this recent report points out some concerning trends.
According to the report, the average car payment in the States is now around $745, with average loan amounts totaling over $41,000; nearly 20 percent of buyers have found themselves with payments of more than $1000 a month. Loan terms are also creeping back to rates similar to those before the Great Recession, with one in five buyers stretched out on a seven-year term. We’ve even seen the return of the eight-year loan, which all but disappeared following the sub-prime lending crisis.
Speaking of the Great Recession, auto buyers are also defaulting in their payments in ways we haven’t seen since 2008. Delinquencies on payments are almost on par with pre-crisis figures, and have dramatically outpaced the rates experienced during COVID. An analysis of the New York Fed’s consumer credit panel found that buyers in 2024 with an above-average credit score (620-679) were twice as likely to fall behind on payments than they were prior to the pandemic. That’s particularly true of buyers aged 18-29, who, according to the report, are falling into serious delinquency (90 days late or longer) more than older generations. Repossessions were also up 43 percent from 2022 to 2024, representing the highest rates since 2009.
Things aren’t much better on the used car side of things. Prices were up 6.3 percent year-over-year as of June, continuing the trend started during the supply constraints of the pandemic. Furthermore, one-in-four trade-in vehicles have negative equity attached, meaning that people are upside down on a large portion of the cars on sale today.
imagine still thinking financial sector valuation is tethered to material reality in the US in 2025. i suppose you think the US military is the most capable and useful military force too. because it’s so expensive, it must be, right?
this is literally Capital Vol 1, Chapter 1 material.
I’m talking about used cars in real life
so go buy a cybertruck. they are crazy expensive and no amount of repairs will ever exceed the “value” of the vehicle. must be a sound financial decision to own one, right?
i drive a 25 year old honda. it rules. in the real world. the maintenance schedule is completely reasonable.
ever wonder why dealerships offer warranties of free repairs for the first X thousand miles? because the depreciation on newer cars far exceeds the cost of repairs across the board, though when you look at service bays, they are frequently full of newer cars.
newer cars are legit garbage. they have more unsecured tracking and recording devices than cellphones, they are far more locked out from non proprietary repair processes, and they are designed to extract the maximum amount of value from the buyer over the shortest amount of time until the buyer can be talked into a trade-in so they are constantly scraping together monthly payments and being forced to pay premiums for bundled insurance.
its yet another example of how the financial services sector and industry have conspired to make people fully dependent on their schemes and extract the maximum wealth from customers who are indoctrinated to think such an exploitative system of constant monthly payments is normal.
this entire article is about how the exploitation of people from subprime autoloans is metastisizing across the broader economy, because it has been a cash cow for capital formations. it has been signaled for over a decade that this was the new party after the housing market collapse. tremendous value has extracted from millions of people, accepting the lie of actuarial valuation, and funneled to a handful of formations… the same formations that issue those valuations you are defending!
I know all that already. what I’m saying is that in the real life used car market, cars that are in better shape tend to be more expensive. Congrats on your little anecdote, but many cars don’t last that long maintenance-wise. I recently traded up from a very nice 2002 to a 2012 for that reason. Trying to avoid a whip of theseus situation