Crisis in the automotive industry: Delay in loan payments increases

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Consumers with low credit scores are falling behind on their auto loans at a record rate.
The upsurge shows that despite the strength of the job market, cash-strapped American households are under pressure from two years of cost-of-living increases and the end of pandemic-related benefits.
The share of payments on so-called “subprime” auto loans that were at least 60 days late rose to more than 6% in December. Subprime loans have high interest rates and are typically made to people with low credit scores.
Delinquent payments — basically unpaid monthly bills — are the first step toward default and the car being repossessed.
The December crime rate is a record, king past prior peaks just before the pandemic, according to data from S&P Global.
The uptick reflects a steady weakening of the finances of poorer American households.
For one, the cost of living has surged—just look at the Consumer Price Index, which has jumped more than 14% over the last two years.
Meanwhile, key COVID-era federal aid to households, like the Child Tax Credit and expanded unemployment benefits, are in the rearview mirror.
Savings levels have slumped.
And Americans are increasingly pulling out the plastic — credit card usage is rising, even as interest rates on these borrowing hits record highs.
Used vehicle prices skyrocketed during the pandemic. That drove up borrowing activity sharply, especially among people with low credit scores who predominantly buy used cars, rather than new ones, an analysis by the Consumer Financial Protection Bureau (CFPB) found.
Now, those higher borrowing costs are getting tougher to manage.