Core Insights - American consumers are facing significant challenges due to rising auto loan debt, with auto delinquencies increasing over 50% since 2010, making auto loans the riskiest consumer credit product [1][2] - The auto market serves as an indicator of household financial health, with rising delinquencies reflecting broader affordability issues in the consumer economy [2] - The current state of consumer credit health is precarious, comparable to conditions seen before the last financial crisis [2] Auto Loan Debt and Delinquencies - The average auto debt in the U.S. exceeds $1.66 trillion, with delinquencies and defaults rising at rates surpassing pre-pandemic levels [6] - Delinquencies in auto loans are an outlier compared to other loan categories, such as credit cards and first mortgages, which have seen declines since 2010 [3] Factors Contributing to Rising Debt - Record-high car prices, with the average transaction price of new vehicles exceeding $50,000 for the first time in September, are a major factor [4] - Many consumers are trading in older vehicles while still owing significant amounts, with nearly 25% of trade-ins having over $10,000 in debt [5] - Extended loan terms, with some financing stretching over eight years, lead to higher overall costs and increased likelihood of owing money on trade-ins [7] Market Repercussions - Car repossessions are on the rise, indicating a troubling trend in consumer financial stability [8] - The bankruptcy of subprime auto lenders and related companies has raised concerns in the stock market, suggesting potential systemic issues within the auto financing sector [8]