Car Payments Are Out of Control
45sThe shocking surge in car prices and loan terms grabs attention immediately, making viewers want to know the details.
▶ Play ClipAI Summary
Americans are falling behind on car payments at alarming rates. Since the pandemic, car prices have surged while incentives like the federal EV tax credit have ended. This has led to longer loan terms (72-84 months), record subprime delinquencies (over 6%), and 1.73 million repossessions last year—the most since 2009. Average payments now exceed $750 monthly, with many over $1,000.
Chapters
[00:00]
Rising Prices and Drying Incentives
Since the pandemic, sticker prices have surged while incentives to buy vehicles have largely dried up, including the federal EV tax credit that ended on September 30th.
[00:15]
Longer Loan Terms
Instead of a standard 60-month term, it's now common to see 72 or 84-month terms, meaning people are paying for six to seven years.
[00:30]
Record Delinquencies and Repossessions
Subprime auto loans 60 days or more overdue hit a record of over 6% this year, and an estimated 1.73 million vehicles were repossessed last year, the most since 2009.
[00:48]
Bankruptcy and Soaring Payments
Tricolor Holdings, a subprime auto lender, filed for bankruptcy last month, and average car payments are now about $750 a month, with many over $1,000.
Study Flashcards (7)
What has happened to car prices and incentives since the pandemic?
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What has happened to car prices and incentives since the pandemic?
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Since the pandemic, sticker prices have surged while incentives to buy vehicles have largely dried up.
When did the federal EV tax credit end?
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When did the federal EV tax credit end?
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The federal EV tax credit ended on September 30th.
00:15
What loan terms are becoming common instead of the standard 60-month term?
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What loan terms are becoming common instead of the standard 60-month term?
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Instead of a standard 60-month term, it's now common to see 72 or 84-month terms.
00:15
What is the record percentage of subprime auto loans overdue by 60 days or more?
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What is the record percentage of subprime auto loans overdue by 60 days or more?
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Subprime auto loans 60 days or more overdue hit a record of over 6% this year.
00:30
How many vehicles were repossessed last year?
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How many vehicles were repossessed last year?
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An estimated 1.73 million vehicles were repossessed last year, the most since 2009.
00:30
Which subprime auto lender filed for bankruptcy?
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Which subprime auto lender filed for bankruptcy?
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Tricolor Holdings, a subprime auto lender, filed for bankruptcy last month.
00:48
What is the average monthly car payment now?
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What is the average monthly car payment now?
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Average car payments are now about $750 a month, with many over $1,000 a month.
00:48
💡 Key Takeaways
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Record Subprime Delinquencies
Reveals the severity of the crisis with a specific statistic (over 6% overdue) that underscores the scale of the problem.
00:30
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Bankruptcy of Tricolor Holdings
A concrete example of the financial fallout affecting lenders, not just consumers.
00:48
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Average Payment Exceeds $750
Provides a tangible figure that makes the financial burden relatable to viewers.
01:01Full Transcript
[00:00] It's official, guys. Americans are falling behind on their car payments, and it's a lot worse than you probably thought. Since the pandemic, sticker prices have surged across the auto market. Meanwhile, the incentives to buy vehicles have largely dried up.
[00:15] For example, the federal EV tax credit ended on September 30th. Here's what happened. People are buying cars that they truly cannot afford by taking out longer loans. So instead of a standard 60-month term, it's now common to see a 72 or 84-month term.
[00:30] And according to WSJ reporting, subprime auto loans 60 days or more overdue hit a record of over 6% this year. And an estimated 1.73 million vehicles were repossessed last year, the most since 2009, which should sound the alarm.
[00:48] To make matters worse, Tricolor Holdings, a subprime auto lender, filed for bankruptcy last month. Average car payments are now about $750 a month, with a ton of them being over $1,000 a month.
[01:01] And keep in mind, this is for some of the longest terms that we have seen historically. It's not just five years anymore. People are now commonly paying this for six to seven years. But let me know what you think about this in the comments.
