There are more reasons to be pessimistic about the state of the auto industry than most people would like to admit. Along with chip shortages and, well, everything is lacking across the board, there is another lingering problem in the shadows that could be even more difficult to fix than the chip shortage. Americans currently have more auto debt to their name than almost any other expense, to the tune of over $ 1,000 billion.
Consumer reports have found that a disproportionate number of people in less than ideal car loan situations are paying up to 10% of their income on car loans. It’s money people could use to pay rent, buy food, or order delicious model cars for the new Jetta. It is money that is safe to say, is used recklessly.
Disturbingly, many of the same qualities that buyers now accept as the status quo in auto loans also emerged during the subprime mortgage crisis of 15 years ago. With only 4% of the total loans dispersed, checked to make sure the borrower can actually repay them.
The report confirmed that at least $ 1.37 trillion in debt is accumulated in hundreds of thousands of auto loans, more than the GDP of some highly developed countries. With so many Americans on the verge of default with car payments, rent increases, outrageous student loan bills, and other expenses, it’s putting enormous pressure on working-class Americans.
It’s a phenomenon that threatens to snowball into yet another recession that so many people have worked so hard to get out of, thanks to an unmanageable public health crisis. Only time will tell how long Americans can keep their funded cars or witness a massive impoundment crisis like we’ve never seen.