Americans appear to be facing an “auto loan crisis.” According to new Google data, Americans are searching “give car back” at record-high levels, which was first spotted by an eagle-eyed user on X, formerly known as Twitter.
Wow -- thought this was fake (it's not)
— CarDealershipGuy (@GuyDealership) October 30, 2023
"give car back" searches at all-time high. try it yourself. pic.twitter.com/xwf6Mg1IcG
In the U.S., during the first quarter of 2023, the average car payment for new vehicles hit a record-high $725, which is an 11.5% increase compared to the same time last year. For leased vehicles, Americans pay an average of $586, which is an 11.2% increase. And for used vehicles, the average payment is $516, which is a mere 2.2% increase, according to recent data from LendingTree.
Since Covid-19, and amid the rise of inflation and interest rates, Americans are taking on a significant amount of auto loan debt. It is the third-largest debt for Americans, with mortgages being the top debt and student loans coming in second, according to the Federal Reserve Bank of New York.
The institution also found that auto loan delinquencies hit 7.3% in the second quarter of 2023, which surpasses levels that were seen before the Covid-19 pandemic.
Related: This economist has some distressing news about your mortgage
Early last month, Sarah Foster, a senior U.S. economy reporter at Bankrate, gave some insight into why car loan rates are on the rise.
“One of the Fed’s core duties is to keep purchasing power in check, and they do it by raising interest rates,” said Foster. “Car loan rates haven’t been this pricey since 2008.”
The mounting economic pressure is starting to take a large bite out of American’s paychecks. A report from LendingClub shows that 62% of Americans are living paycheck to paycheck.
On a brighter note, Americans can expect a break from rising interest rates as the Federal Reserve Open Market Committee recently voted to keep interest rates steady at a range of 5.25% to 5.50% in their Nov. 1 meeting.
