Washington, D.C. – The Consumer Federation of America (CFA) released a new report, Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies, spotlighting an auto lending market in distress, with borrowers falling into delinquencies and defaults at a pace that exceeds pre-pandemic levels and rivals the years immediately preceding the 2008 economic crisis.
“Access to a vehicle is a critical component of economic success for American consumers, and when that access is jeopardized en masse, serious economy-wide concerns arise,” the report states. “Consumers will prioritize their car payments over many other household expenses and debt obligations, which means that when auto loan delinquencies are rising, serious financial problems are brewing in American households.”
Americans are drowning in auto debt and now owe $1.66 trillion. As delinquencies, defaults and repossessions are increasing, the federal financial regulators who police the marketplace are taking significant steps back from oversight and enforcement of predatory practices in the auto market. The report calls on Congress to reexamine the practices of car dealers and lenders that raise prices for borrowers and push them to the financial brink.
“Buying a car should be a way for families to achieve economic success, but it is increasingly becoming an unaffordable burden that pushes consumers down into a debt spiral,” said Tara Mikkilineni, senior fellow at Consumer Federation of America. “The stress we are seeing in the auto finance marketplace is a glaring warning sign for policymakers to reexamine this market and root out exploitative conduct.”
“Families are currently in an economic pressure cooker, and expensive car loans are rapidly jeopardizing their ability to avoid disastrous outcomes like delinquency and repossession.” said Erin Witte, director of consumer protection at Consumer Federation of America. “Americans deserve an auto marketplace that is fair and affordable, but that will not happen until we can get rid of some of the worst abuses by dealers and lenders that make the car buying experience unnecessarily painful and expensive.”
As Americans struggle under the weight of a worsening affordability crisis, Driven to Default calls for urgent federal action: stronger enforcement, tougher rules on auto lenders, and structural reforms to protect borrowers.