A growing number of car buyers have loans worth more than their vehicles — and experts are worried about a surge of delinquencies

Fri, 03/03/2023 - 11:54

Used cars sit in the sales lot of a used car dealership in California. — On average, the annual percentage interest rate on new vehicles was 6.5% in 2022 and 4.1% in 2021, while for used vehicles it was 10% in 2022 compared to 7.4% in 2021.
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Car sales with a trade-in with negative equity rose from 14.9% to 17.4% in one year.
Having negative equity means having a car debt that's more than the value of the car itself.
The rate of severely delinquent car loan payments has not been this high since 2009.

Like a lot of other things in the US, car loans are getting more expensive. So much so, that some drivers have debt on their cars that far exceeds the value of the car itself.