Posted on 03/18/2023 6:48:59 PM PDT by SeekAndFind
Since the COVID-19 pandemic, Americans have taken on significantly more debt to buy vehicles. This is especially true for Gen Z and Millennials, who the Federal Reserve believes may have borrowed beyond their means.
In this infographic, Visual Capitalist's Marcu Lu visualizes data from the Fed’s most recent consumer debt update.
The first chart in this graphic shows the growth in outstanding car loans between Q2 2020 (start of the pandemic) to Q4 2022 (latest available).
We can see that Americans under the age of 40 have grown their vehicle-related debt the most. It’s natural for Gen Z (ages 11-26) to have higher growth figures because many of them are buying their first car, but 31% is quite high relatively speaking.
Part of this can be attributed to today’s inflationary environment, which has pushed used car prices to new highs. Supply chain issues have also resulted in over 30% of new cars being sold above MSRP.
Because of these rising prices, the Fed reports that the average auto loan is now $24,000, up 41% from 2019’s value of $17,000.
Interest rates on auto loans are typically fixed, meaning many young Americans were able to take advantage of the low rates seen during the pandemic.
Despite this, one in five Gen Zs say that their car payments account for over 20% of their after-tax income.
Shown in the second chart of this infographic, the amount of auto debt transitioning into serious delinquency is much higher for Gen Z and Millennials. Throughout 2022, these generations saw $20 billion in auto debt fall 90+ days behind.
The outlook for these struggling borrowers is bleak. First there’s inflation, which has pushed up the prices of most consumer goods. This eats into their ability to make car payments.
Second is rising interest rates, which make credit card debt—another pain point for young borrowers—even more costly. Finally, there’s student loans, which are expected to resume in summer 2023. Payments on student debt have been suspended since the beginning of the COVID-19 pandemic.
Will there be a auto loan forgiveness movement similar to the student loan forgiveness movement?
The Twinkies will be telling the demented fag pedophile they aren’t going to vote for him in 2024 unless he cancels their car loans. They were “tricked” into buying new cars by the car salemen.
Oh hell no. The repo business will be booming and obama will bring back his “cash for clunkers” program to get gas powered vehicles off the road. Ok now, snowflakes, we are going to repo your gas powered cars and give you an incentive to go further into debt with an EV car. Save the planet comrade!!!
Excellent Observations! LOL :)
Maybe these freaks shouldn’t be getting 50-60k Rubicon unlimited Wranglers
or 50-60k trucks.
The CUVs and Accords aren’t hip, and forget mentioning a used car to them.
The healthy young folks who should be making babies are too strapped paying house mortgages on their car.
effing idiots. NONE of my friends paid more that a week’s salary for a car until they had homes and families. Now, they’re all well-to-do professionals and three have a few vintage cars in the garage.
But, these 18YO morons need the newest Hellcat or Jailbreak Challenger so they can make vids for tiktok. Who cares if the payment is $1,200 a month+insurance..
Poor money management skills. I’m proud of our middle daughter. She bought a used car that CarMax said had collision damage. We took it to a shop and they put it on the lift and found no evidence of damage (no bolt washers moved exposing bare metal, no bent metal, no straightening, etc). They concluded it was minor cosmetic damage. She bought it cheap and it works fine. It got hit in a huge hailstorm at the Denver Airport parking and the hood, roof and passenger door look like it was pummeled with golf balls. The insurance company totaled it and paid her Bluebook.
She kept the car and is still driving with the dimples all over. She banked their payout. Neither of our daughters have felt the need to drive a new car and they have no loans.
I’m really proud of them.
I would not be so hasty to judge. The price of second hand cars also went sky high over the past decade
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