The debt of new and used cars is growing rapidly in the United States, surpassing student loan debt and becoming the second largest debt of American households, behind only mortgages.
The rising price of automobiles, combined with more flexible financing conditions, has pushed consumers to take out larger loans to acquire their vehicles. With inflation and rising interest rates, many are finding it difficult to repay these debts, leading to a significant increase in the number of debtors.
With the decline in vehicle values, many consumers find themselves with debts greater than the current value of their cars, a problem known as “negative equity.” This situation not only harms consumers but also affects financial institutions, which may struggle to recover the value of the vehicles in case of default.
The growing automotive debt represents a significant risk to the U.S. economy, as it can lead to a slowdown in consumption and increase the number of defaults. Moreover, high car debt can hinder economic recovery in the event of a new crisis, as consumers will be more indebted and less likely to spend on other goods and services.
Source: Motor1.com | Photos: Freepik | This content was created with the help of AI and reviewed by the editorial team
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