Auto loans have been a common means of financing car purchases in the US for decades, but the rapid growth of the auto loan industry in recent years has left many Americans struggling to keep up with their payments. The auto loan crisis has deepened over the past few years, with millions of borrowers falling behind on their payments and facing the threat of repossession.

According to data from the Federal Reserve Bank of New York, outstanding auto loans in the US reached a record high of $1.36 trillion in the fourth quarter of 2021. While the majority of borrowers are able to keep up with their payments, the number of delinquent auto loans (defined as those more than 90 days past due) has risen steadily over the past few years. As of the end of 2021, there were approximately 7.1 million delinquent auto loans in the US, up from 6.3 million at the end of 2020.

One of the reasons for the rise in delinquencies is the subprime auto loan market. Subprime borrowers are those with credit scores below 620, and they typically pay higher interest rates than prime borrowers. In recent years, lenders have been more willing to extend credit to subprime borrowers, which has led to a surge in subprime auto loan originations. According to Experian, subprime auto loans accounted for 22.5% of all auto loan originations in the fourth quarter of 2021, up from 20.5% in the same period in 2020.

The rise in subprime auto loans has led to an increase in defaults. According to the Federal Reserve Bank of New York, the delinquency rate on subprime auto loans was 10.7% in the fourth quarter of 2021, up from 9.7% in the same period in 2020. Subprime borrowers are more likely to struggle to make their payments due to their lower credit scores and higher interest rates, which can make their monthly payments unaffordable.

The auto loan crisis has left many Americans in deep financial trouble. When borrowers fall behind on their payments, their cars can be repossessed, which can make it difficult for them to get to work and earn a living. In some cases, borrowers may owe more on their auto loan than their car is worth, which can make it difficult to sell the car or refinance the loan.

Many borrowers turn to auto title loans as a means of getting out of debt, but these loans can be even more dangerous than traditional auto loans. Auto title loans are short-term loans that require borrowers to put up their car as collateral. If the borrower is unable to repay the loan, the lender can repossess the car. Auto title loans often carry high interest rates and fees, which can make it difficult for borrowers to repay the loan.

The auto loan crisis has prompted calls for reform. Some advocates have called for lenders to be required to consider a borrower’s ability to repay a loan before extending credit. Others have called for more transparency in the auto loan market, so that borrowers can better understand the terms of their loans and make informed decisions. Some have even called for the government to step in and regulate the industry.

In the meantime, borrowers who are struggling with their auto loans have few options. They can try to negotiate with their lenders to modify their loans or set up payment plans, but these options are often difficult to obtain. Some borrowers may be able to sell their cars to pay off their loans, but this is not always possible. For many Americans, the auto loan crisis is an ongoing struggle that threatens their financial stability and well-being.