Unscrambling the U.S. Auto Debt Explosion

The median vehicle price has increased by over four thousand dollars over the past four years. With vehicle prices rising consumers have extended their auto loan duration with the average moving from around five years to seven years. Increasing loan terms not only increase the total interest paid on the vehicle but also lead to many vehicles being underwater for a longer period of time. About one in three people who trade in a used vehicle when they purchase a new vehicle carry over negative equity which they roll into the new vehicle loan. This means their current vehicle starts off even more underwater than the typical new car, making the dynamics that much worse the next time they buy another vehicle.

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Unscrambling the U.S. Auto Debt Explosion

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