Recent data from Edmunds reveals that an unprecedented 17% of American car purchasers now have monthly car payments of $1,000, a significant increase from just 7% three years ago. This trend highlights the extent to which consumers, despite being financially stretched, are willing to take on massive auto debt in these uncertain economic times as macroeconomic headwinds pile up.
New Google data, first revealed by X user CarDealershipGuy, shows Americans are searching "give car back" on the internet has soared to a record high.
CarDealershipGuy added, "For everyone DMing me: No, you can't "give back" a car - That's a repossession."
This year, we have been dutifully tracking the auto sector, considered a leading economic indicator, to pinpoint the arrival of the crushing auto loan crisis and even the possibility of the onset of the next recession.
The latest sign of an auto crisis emerging materialized in recent weeks:
The percent of subprime auto borrowers at least 60 days past due on their loans rose to 6.11% in September, the highest in data going back to 1994, according to Fitch Ratings. -Bloomberg
What's clear is the subprime borrower, who took out 84-month +$1,000 monthly car payments, is getting squeezed in the high-rate environment.
The auto loan crisis, something we called a "perfect storm" earlier this year, appears to be unfolding.