Auto Loan Default: Disturbing Signs of Economic Trouble: Recession Worries Reverberate the 2008 Financial Crisis Warnings as Americans default at record rate

With growing concerns about the U.S. economy, a new pattern is emerging as they lag behind car payments at a record pace, according to a report. According to the Daily Mail, this may be a warning sign similar to the 2008 financial crisis.

Sub-borrowers strive to keep up

According to Fitch Ratings, nearly 6.6% of subprime auto borrowers, subprime auto borrowers with poor credit scores and greater financial risks lag behind at least 60 days in January 2025 auto loans, according to Fitch Ratings.

Similar situations

The last time the U.S. witnessed such an increase in defaults came in the years leading up to the 2008 financial crisis, when a wave of subprime mortgage defaults caused an economic collapse. History may repeat itself as the auto loan market raises concerns that the U.S. economy may head to another recession, according to the Daily Mail.

Increased costs increase pressure

The overall financial burden Americans are experiencing complicates the problem. According to the report, the growth rate of cost of living is increasing, with consumers suffering from rising prices for automobiles, insurance, maintenance and even rental and grocery costs.

The Daily Mail reported that consumers will further burden because of the current trade war between the United States, Canada and Mexico, as this will increase the price of new cars. According to the Daily Mail, the price of new cars could rise between $4,000 and $10,000 if U.S. President Donald Trump’s 25% tariffs take effect, according to Anderson Economic Group estimates.

Expand payment plan

Currently, according to the report, some car buyers are resorting to an expanded payment plan so that they can afford their monthly payments based on the report.

Car prices and interest rates soar

According to the Daily Mail, the average price for buying a new car has risen to about $47,000 and the price of used cars is about $25,000. Even the borrowing rate for cars has increased to more than 9% on new cars, and the borrowing rate for used cars has increased by about 14%, according to the Daily Mail.

But it’s not just that car payments themselves can hurt consumers. According to the report, car owners also experience the pain of increasing incidental expenses. According to the Daily Mail, car insurance premiums have increased by 19% year-on-year since 2020, and repair and maintenance prices have risen by 33%.

Experts such as Edmunds researcher Jessica Caldwell claimed that “people who are in the middle of a loan, they may be hitting the point where the cost of living is getting, and they can’t pay anymore,” the daily mail quote. ”

FAQ

Why are more Americans behind car payments?
Rising cost of living, including car prices, insurance and maintenance, is putting financial pressure on many families, according to a report by the Daily Mail.

How does an extended payment plan help buyers?
Extended payment plans allow buyers to make monthly payments.