This major US auto lender went bust as record number of Americans lag on debt payments. How to protect yourself now

Core Insights - The bankruptcy of Tricolor Holdings highlights the severe financial struggles faced by many Americans, particularly in the auto loan sector [1][2][3] Company Overview - Tricolor Holdings, a used-car dealer based in Dallas, specialized in providing loans to individuals with poor credit and operated 65 dealerships across six states [1] - The company was recognized by major investors like BlackRock for its efforts to assist underserved communities, but it was ultimately in significant financial distress [3] Industry Context - The auto loan crisis is exacerbated by rising car prices, which average just under $50,000, and increasing loan rates, exceeding 9% for new cars and nearly 14% for used cars [6] - Total household debt in the U.S. has reached a record $18.39 trillion, with Americans allocating approximately 11% of their income to debt payments, limiting their ability to spend on essentials [5] Financial Impact - Fifth Third Bank reported losses of up to $200 million due to "fraudulent activity" at Tricolor, while JPMorgan Chase faces similar risks with about $200 million at stake [4] - Origin Bank has an additional $30 million tied to the failed company [4] Demographic Insights - Young borrowers, particularly from Gen Z, are experiencing the highest rates of delinquency on auto loans, with 7.5% behind on payments [7] - States like Mississippi, Louisiana, and Georgia are leading in the percentage of auto loan borrowers with late payments [7]