US Car Loan Crisis: Americans Can’t Afford Cars Anymore: Wall Street Braces for Default Storm!

Published on: October 22, 2025

US Car Loan Crisis: Overview

Delinquency Surge: Car loan defaults hit levels unseen since the 2008 crisis, up 50% in 15 years; subprime borrowers at 6.43% (highest since 1993).
Repossessions Rise: 1.73 million cars repossessed in 2024, highest since 2009; $1.66tn debt pile doubles in 12 years, bundled into asset-backed securities (ABS).
Subprime Warning: Tricolor and First Brands collapses signal risks; JP Morgan’s Jamie Dimon warns of more “cockroaches” in private credit.
Goldman Sachs Alert: President John Waldron: “Defaults are coming, and it’s not going to be pretty,” as consumer stress mounts despite 4.3% unemployment.
Cost Crunch: New car average $50,000 (up 35% since 2019); monthly payments $761 (new), $570 (used); 30% of loans in negative equity.
Broader Debt Woes: Credit card and student loan defaults at records; ACCC clients’ debt up 60% to $30,000, with white-collar cases doubling.
Immigration Twist: Trump’s deportation plans threaten subprime lenders like Lendbuzz; Moody’s downgrades bonds for undocumented borrower risks.

Americans Ditch Cars: $1.66tn Debt Crisis Rattles Wall Street

New York, October 22, 2025 – In a nation where cars are lifelines, Americans are buckling under the weight of $1.66tn in auto debt—the highest ever—triggering a delinquency wave unseen since 2008. VantageScore data shows defaults up 50% in 15 years, with subprime borrowers at 6.43% (Fitch Ratings, highest since 1993). Repossessions hit 1.73 million in 2024 (Cox Automotive), and Wall Street is on edge as bundled loans (asset-backed securities) sour. “When you see one cockroach, there’s probably more,” warns JP Morgan CEO Jamie Dimon. Goldman Sachs President John Waldron adds: “Defaults are coming, and it’s not going to be pretty.”

The Squeeze: Skyrocketing Costs, Shrinking Wallets

Average new car prices top $50,000 (up 35% since 2019), pushing monthly payments to $761 (Edmunds). Used cars average $570, but 30% of trades are in negative equity—owners owing $7,000 more than the car’s worth. “Consumers buy the same car, but payments jump $300/month,” says Edmunds’ Jessica Caldwell. With 4.3% unemployment, stress signals abound: ACCC clients’ debt rose 60% to $30,000 in five years, now including $75,000 earners—double from 2024.

Subprime Storm: Lenders on the Brink

Subprime loans, $330bn of the $1.66tn pile, are bundled into $90bn ABS, vulnerable to defaults. Tricolor and First Brands’ September collapses, under DOJ fraud probes, sparked warnings for $3tn private credit. Consumer Portfolio Services’ repossessions doubled since 2022; CarMax CEO Bill Nash notes “consumer angst.” Fitch’s Mike Girard predicts rising delinquencies into 2026, fueled by weaker underwriting in 2022–23.

Immigration Risks: Trump’s Shadow

Trump’s deportation push threatens lenders serving undocumented borrowers without Social Security numbers. S&P put Lendbuzz and Southern Auto Finance on negative watch; Moody’s downgraded First Help Financial bonds, citing “increased default risk” from potential emigration. “Repossession remedies could fail,” Moody’s warns.

Broader Debt Dominoes

Credit card delinquencies climb, and student loan defaults hit records (NY Fed). ACCC calls surged to 53,900 in 2025 (from 33,000 in 2019), with credit cards funding basics. Deutsche Bank’s Kayvan Darouian: “Subprime borrowers are under stress,” while Moody’s Mark Zandi adds: “Alarm bells with jobs intact—what if unemployment rises?”

Wall Street’s Wake-Up: Smaller Than 2008, But Ominous

Unlike 2008’s $3tn subprime mortgages, auto ABS is modest, but signals consumer cracks. “Not a systemic threat, but a consumer health red flag,” says Darouian. As payments strain, defaults could ripple, testing lenders amid a softening economy.

America’s car addiction is hitting a wall—Wall Street hopes it’s not the cliff.

Source: telegraph.co.uk

US Car Loan Crisis: Americans Can’t Afford Cars Anymore: Wall Street Braces for Default Storm!

US Car Loan Crisis: Overview

Americans Ditch Cars: $1.66tn Debt Crisis Rattles Wall Street