It comes as no surprise that the United States is one of the most indebted nations on planet Earth. Credit cards, student loans, car notes, and medical bills can put an American in a financial hole quickly.
Recent statistics from the Federal Reserve Bank of New York indicate that more car notes are at least three months late than at any time in United States history. Some seven million car notes haven’t been paid in at least 90 days or longer.
Some economists believe that this is an early indicator of economic problems on down the road. Even though the United States’ employment rate is fine and dandy and the economy is powerful right now, a rising amount of Americans are finding it more and more difficult to satisfy their bills.
Although these people are more than entitled to their opinion, especially if they’re experts with many decades of experience, it’s important not to forget that consumer auto debt in the United States is higher than ever before. As of December 2018, the United States’ total debt outstanding against motor vehicles was a whopping $584 billion.
Even though the subprime mortgage lending crisis of the late 2010s was a clear, solid indicator that we shouldn’t widely make loans to people with poor credit ratings, it seems as if we haven’t learned our lesson as a society. In 2009, just 28 percent of auto loans were extended to buyers with low credit scores. Just six years later, in 2015, a whopping 39 percent of car notes belonged to buyers with poor credit scores.
Although these statistics could be indicators of nothing, it’s not good for an economy to have such exceedingly high levels of car loans. Since cars can be used as housing and transportation, it’s shocking to see that so many car notes are going seriously delinquent.
One thing that we need to keep in mind is that all car debt, consumer and commercial together, in the United States totals to about $1 trillion. The mortgage market has debt outstanding to the tune of $9 trillion. Even if the car lending market did fold in on itself and such a systemic problem did hurt the economy, its effects wouldn’t be substantial – maybe not even material.
18- to 29-year-olds are further behind on car debts than any other age group.