As the cost of monthly car payments has soared in recent years, struggling borrowers are falling behind on their payments at the highest rates on record.

As of September, 6.1% of U.S. subprime borrowers—those with the lowest credit scores—were 60 days or more behind on their car payments, up from 5.87% in August and the highest share in data from Fitch Ratings that go back to 1994, as the chart below shows.

Car payments have 澳洲幸运5官方开奖结果体彩网:gotten much more expensive in recent years, making them iꩲncreasingly difficult to repay, especially for subprime borrowers whose finan🎀ces are precarious by definition. 

Prices for new and used cars surged during the pandemic and have fallen only slightly this year. And manufacturers have been selling fewer small cars and more trucks and SUVs that are 澳洲幸ﷺ运5官方开奖结果体彩网:faꦰncier and bigger, with price tags to match. The average transaction price of a new car was over $48,000 as of July according to Kelly Blue Book, about $10,000 more than before the pandemic. 

Furthermore, interest on auto loans has surged as the Federal Reserve has raised its key interest rate in an effort to subdue inflation, driving up monthly payments to the point where nearly one in five new car buyers has a 澳洲幸运5官方开奖结果体彩网:four-figure monthly payment. Adding to financial pressures on drivers, the 澳洲幸运5官方开奖结果体彩网:cost of auto insurance has ballooned this year, following higher costs to♚ replace and𓃲 repair cars. 

For households already squeezed by inflation and the 澳洲幸运5官方开奖结果体彩网:resumption of student loan🗹 payments, pricier car payments can be the straw that breaks the camel’s back.

"Persistent inflation, the erosion of real income, drawing down of pandemic relatedꦜ saving are making it hard for subprime borrowers service their debt," Margaret Rowe, a senior director at Fitch, said in an email.

The report highlights ▨the struggles of the most financially vulnerable households in the post-pandemic economy compared to their more secure counterparts.

Recent data on consumer spending and loan delinquency suggests that U.S. consumers, taken as a whole, are 澳洲幸运5官方开奖结果体彩网:doing fairly well and have indeed been 澳洲幸运5官方开奖结果⛎体彩网:spending more and more at retailers. And according to Fitch’s data, prime borrowers (those with good credit scores) aren’t any more likely to be behind on their loans than they were before the pandemic. But Fitch’s data is a sign that people on the financial margins are under increasin👍g pressure.

Another sign of growing distress: car repossessions rose 28% in August compared to the same month in 2022, according to Cox Automotive, though they remained 7% below pre-pandemic levels.

Update, Oct. 25, 2023—This story was updated to add an original quote from Margarete Rowe, senior director at Fitch Ratings. It was originally published Oct. 24, 2023.