Left Behind? Auto-Loan Delinquencies Are the Highest Since 2012

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The Federal Reserve enacted a zero interest rate policy (ZIRP) and quantitative easing (QE) backk in 2008. The suppression of interest rates stimulated auto sales … and auto loans.

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But now more Americans than ever arer 90 days behind on their auto loans.

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More Americans than ever are at least three months behind on their auto loans, a sign that the U.S. economy may have little growth left in the tank.

The number of loans at least 90 days late exceeded 7 million at the end of last year, the highest total in the two decades the Federal Reserve Bank of New York has kept track. Expressed as a percentage of total debt, the delinquency rate is the highest since 2012, as overall borrowing has also increased.

The data show not all Americans are benefiting from the strong labor market, New York Fed economists say. Consumers with the weakest credit have driven deteriorating performance of auto debt: The share of subprime borrowers who fell well behind on car payments the last three months of the year was the highest since the second quarter of 2010.

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Auto delinquencies are on the rise even as lenders have shifted business to more creditworthy borrowers. Total car loan originations climbed to a record $584 billion last year.

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