In a sign that the economy might be headed into a recession, an analysis by Bankrate.com shows that auto loan delinquencies are on the rise, hitting the highest level since 2007.
Back in 2007, the high rate of auto loan delinquencies served as a warning sign about a coming economic downturn–namely the Great Recession that began in December of that year.
The biggest age groups not paying their loans include Generation Zers and Millennials.
TransUnion notes higher percentages of customers between the ages of 18 to 40 were beyond the 60 days past due notice on their auto loans.
Cox Automotive, which owns Kelley Blue Book and Autotrader.com, noted that increased numbers of delinquent auto loans took place during the first part of 2022. Cox Automotive also noted that the number of these loans that are 60 days delinquent has been increasing since las year.
Financial analysts have stressed that younger people have been delinquent on paying their loans because they agreed to take on a debt they couldn’t afford at the time. In order to keep these loans on the books and not have them go into default, TransUnion noted that banks and lending groups are adapting to current economic conditions and are offering some forms of leniency to help borrowers.
“To help keep monthly payments in check, we anticipate lenders may offer consumers options like lengthened loan terms to offset affordability challenges,” TransUnion noted.
Some financial firms have reported that more Millennials and Gen Zers are getting part-time jobs on top of their full-time positions as they look to off their loans.
In May, the Federal Reserve Bank of New York announced an increase of delinquent car loans at the 30-day level.
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