American auto debt has reached a record high of $1.66 trillion USD, according to a report published by the Consumer Federation of America (CFA). The organization describes the auto financing market as being “at a breaking point,” with an explosion in the numbers of late payments, credit defaults and repossessions.
The document, titled “Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies,” compares the current situation to the one that preceded the 2008 financial crisis. The CFA criticizes Congress and federal regulators for turning a blind eye to what it deems abusive dealer practices, which are worsening the situation for consumers.
Unsustainable monthly payments
Buyers are facing record-high monthly payments: an average of $745 USD per month, with 20 percent of drivers having to pay more than $1,000 USD. Soaring interest rates are only adding to their misery, and the imminent expiration of the $7,500 federal tax credit for electric vehicles could add to the pressure.
Another worrying sign: it's no longer just subprime borrowers who are in trouble. Even buyers with good credit scores are now showing twice as many delinquencies as before the pandemic. According to Cox Automotive, vehicle repossessions jumped by 43 percent between 2022 and 2024, affecting all age groups.
A broader risk for the economy
The CFA warns that the crisis is not limited to cars being repossessed by banks. As many Americans prioritize their car payments at the expense of other essential spending, the rise in defaults could be a symptom of much larger economic problems.
The federation argues that “now is the time for policymakers to take a hard look at the auto lending market to call out exploitative practices that raise prices and require our federal regulators to stop sleepwalking their way through this crisis while Americans suffer.”
A debate on responsibility
A fundamental question remains: should financial institutions be blamed, or the individual choices of consumers? Some believe that part of the solution lies in personal responsibility, such as avoiding outsized monthly payments and opting for a well-maintained used car, rather than giving in to the temptation of buying new at all costs.