Auto loan delinquencies have been surging to their highest level in history.On this episode of the Odd Lots podcast, Rikard Bandebo, the chief economist at VantageScore, joins @thestalwart and @tracyalloway to discuss why Americans are having so much trouble keeping up with their car loans, and whether this phenomenon signals something broader about consumer stress https://t.co/qoGXjc1GMM ...

Auto loan delinquencies have been surging to their highest level in history.On this episode of the Odd Lots podcast, Rikard Bandebo, the chief economist at VantageScore, joins @thestalwart and @tracyalloway to discuss why Americans are having so much trouble keeping up with their car loans, and whether this phenomenon signals something broader about consumer stress https://t.co/qoGXjc1GMM ...

Core Insights - The auto loan delinquency rate among subprime borrowers has reached its highest level since 1994, with 6.65% of borrowers at least 60 days past due on their loans in October [1] - Auto loans have shifted from being one of the least risky consumer credit products to one of the most delinquent types of loans [2] - Delinquencies have been rising across all credit tiers and income groups, despite tightened lending criteria in the past three years [3] Economic Factors - The surge in car loan delinquencies is attributed to a combination of rising car prices, interest rates, and everyday living costs [4] - The average transaction price for a new vehicle surpassed $50,000 for the first time, reaching $50,080 in September [5] - The average interest rate for new car loans is currently 6.8%, while for used cars it is 11.54%, with subprime borrowers facing rates around 13.38% [5] Consumer Sentiment - A Capital One survey indicates that 56% of Americans are concerned about their financial future and managing living costs, which exacerbates the challenges for subprime borrowers [7] - The Consumer Price Index (CPI) rose by 3% year-over-year in September, indicating increasing costs for everyday goods [6] Implications of Delinquency - Falling behind on auto loan payments can lead to car repossession and significantly damage credit scores, affecting future loan eligibility [8][9]

Core Viewpoint - Carvana's shares declined by 9.6% following a strong third-quarter earnings report due to disappointing fourth-quarter guidance and rising concerns in the auto industry [1][5][6] Financial Performance - Carvana reported a 44% increase in retail units sold, totaling 155,942, and a 55% rise in revenue to $5.65 billion, surpassing estimates of $5.1 billion [3] - Adjusted EBITDA increased from $429 million to $637 million, with earnings per share rising from $0.64 to $1.03, and adjusted earnings per share reaching $1.50, exceeding the consensus of $1.32 [4] Future Outlook - For the current quarter, Carvana anticipates retail units sold to be 150,000 or more and adjusted EBITDA to exceed the previous range of $2 billion to $2.2 billion, raising concerns about potential sequential declines in vehicle sales [5][8] - Despite strong growth, the stock is considered expensive, with high expectations already factored in [6]

Core Insights - Rising costs of purchasing and maintaining vehicles, driven by inflation and tariffs, are leading to increased auto loan defaults and repossessions, signaling potential economic crises for American consumers [1][2] - The Consumer Federation of America (CFA) highlights alarming trends in delinquencies and defaults that mirror those seen before the Great Recession [2] Auto Loan Defaults - The average price of a vehicle has reached nearly $50,000, with almost 20% of new car buyers paying $1,000 or more monthly [3] - Nearly 1 in 5 new car buyers in Q1 2025 are taking out loans that last seven years, while used car prices have increased by 6.3% year-over-year as of June 2025 [3] Consumer Debt and Regulatory Concerns - Americans currently owe over $1.66 trillion in auto debt, with the CFA expressing concerns over the lack of federal oversight as regulatory bodies like the CFPB and FTC have reduced their enforcement of predatory practices [4][6] - The CFA has called for an end to exploitative practices in the auto loan market, including interest-rate kickbacks between dealers and lenders [4] Government Response - The White House has indicated a commitment to restoring economic policies from the previous administration, which included tax cuts and deregulation, as a means to alleviate financial burdens on consumers [5]