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This is a picture of distress. Car loans are the last debt that Americans generally default on, since a car is in most cases necessary to get to work.
The big picture: The number of Americans in default on their car loans is hitting record highs, but the default rate is not: Auto lenders have been issuing many more loans in recent years.
- "The overall performance of auto loans has been slowly worsening, despite an increasing share of prime loans in the stock," write New York Fed analysts.
- Whom you borrow from makes a huge difference. 6.5% of loans from auto finance companies are 90+ days past due, compared with only 0.7% of loans from credit unions.
Why you’ll hear about this again: This degree of woe is happening despite a growing economy and record-low unemployment. If and when a recession hits, expect these numbers to get a lot worse.