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Millennials And Gen Z Can’t Afford Their Auto Loans, And It’s Only Getting Worse
Millennials And Gen Z Can’t Afford Their Auto Loans, And It’s Only Getting Worse-October 2024
2024-02-19 EST 22:11:55

In a photo from Thursday, Dec. 28, 2017, people walk through the Taylor Chevrolet showroom in Taylor, Mich.

It’ll come as a surprise to no one, but car buyers are falling really far behind on . In fact, it’s happening at rates we haven’t seen since the financial crisis of 2008 and 2009, according to The problem is only going to get worse, too. Remember, aren’t paying back their student loans right now, but that’s all set to change soon.

On average, AutoNews reports that 3.58 percent of have been late on their auto loans by at least 90 days. For some context, just 2.13 percent of all borrowers are late. Keep in mind, these numbers are overall. In the first quarter of 2023, 4.55 percent of 18- to 29-year-olds were at least 90 days late. 3.66 percent of 30- to 39-year-olds were equally late. We haven’t seen numbers like these since .

A spokesperson for Jerry, an insurance comparison site, told the outlet that the growth in delinquencies from the first quarter of 2022 to the first quarter of 2023 is the sharpest of any 12-month period in the Fed’s 23-year data set.

Interestingly, the amount of money borrowed for vehicles in the first quarter of this year by dropped 25 percent from the same time last year. It represents the largest quarter-over-quarter drop in the Fed’s data. Part of the reason for this may be the tightening by lenders of who they’ll give money too.

From the end of the second quarter of 2020 to the end of 2020, consumers under 40 reported committed to the largest dollar amount of of any 10-quarter period in the Fed’s records.

These financial issues reportedly stemmed from the pandemic, which is not surprising. Stimulus payments and debt forbearance programs — like the aforementioned student loan pause — improved customer credit scores. Because of that, were able to borrow more for a vehicle that they would have in the past. God forbid a young person be able to afford a new car.

The Federal Reserve’s quarterly household debt report — which draws from Equifax data to produce its auto loan delinquency report — breaks out borrowers into age ranges including 18 to 29 and 30 to 39. AutoNews reports that these brackets capture older Gen Zers and nearly all millennials. These two demographics — which I am a part of — are historically more severely delinquent than the national average. The study covered data from 2000 to the first quarter of this year.

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