This Money Expert Says the Car Market Is Broken: 5 Things To Know

Core Insights - The U.S. car market is fundamentally broken, with record-high auto loan delinquencies and unprecedented new vehicle prices exceeding $50,000 [1][3][8] Vehicle Pricing and Delinquencies - New vehicle prices have reached an all-time high, averaging over $50,000, while auto loan delinquencies are at historic levels, with over 6% of subprime auto loans more than 60 days delinquent [2][5] - The delinquency rate for auto loans was reported at 3.8% in June 2024, the highest since June 2010, indicating a significant affordability crisis [5] Factors Contributing to the Crisis - The increase in delinquencies is primarily due to larger auto loan amounts rather than rising interest rates, as borrowers sought larger loans amid surging car prices [6] - Lenders have relaxed credit standards to accommodate these larger loans, exacerbating the situation [6] Affordability Challenges - Elevated interest rates and larger loan amounts have led to unsustainable monthly payments for many borrowers, resulting in a surge of vehicle repossessions, which reached 1.73 million last year, the highest since 2009 [7] - Middle-class Americans are facing unprecedented challenges in affording reliable transportation, despite continuing to purchase vehicles [8]