- Americans are falling behind on their car payments and 5.1% are delinquent.
- Southern states, led by Mississippi at 9.8%, have the highest delinquency rates.
- Gen Zers and Millennials struggle to make ends meet in today’s tough economy.
The economy keeps chugging along, but there are growing signs of trouble. Hiring is slowing down, tariffs are starting to have an impact, and the Consumer Price Index is up.
The latest troubling development is an increasing number of auto loan delinquencies. According to a new LendingTree study, 5.1% of Americans have fallen behind on car payments. However, the delinquency rate varies significantly by state.
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Southern states had a poor showing as Mississippi (9.8%), Louisiana (8.4%), and Georgia (7.8%) had the highest delinquency rates. They were followed by Alabama (7.6%), South Carolina (7.3%), and Kentucky (6.8%).
A variety of factors go into late payments and the study found “borrowers in states with higher delinquency rates often face heavier monthly car payment burdens.” As an example, the national average car payment was $751, but it’s $821 in Louisiana and $802 in Mississippi.
LendingTree
LendingTree’s chief consumer finance analyst, Matt Schulz, also pointed out, “Many of the states with the highest delinquency rates are among the lowest income states in the country.” With less money to work with, consumers in these states are feeling the pressure of higher prices and this could help to explain why people are falling behind on their payments.
As for the states with the lowest delinquency rates, Alaska, Utah, Washington and New Hampshire all came in at 3.2%. LendingTree also noted 28 states fell below 5.0%.
2% of borrowers were 30 days late in the first quarter, while 0.9% were 60 days late. Another 0.9% were 90 to 120 days behind schedule.
LendingTree
Gen Zers had the highest delinquency rate of 7.5%, despite having the lowest monthly payment of $577 on average. They were followed by Millennials, who have a delinquency rate of 6.9% and an average payment of $735. Only 4.3% of Gen Xers fell behind on payments, while Baby boomers had the lowest delinquency rate at 1.9%.
The delinquency rates could foreshadow trouble and Schulz noted, “Auto loan payments are almost always a high priority for Americans because the vast majority of us need our vehicles to be able to get to and from work so we can make a living.”
Given this, auto loan delinquencies typically mean people are struggling. However, Schulz said this isn’t a “great surprise, given stubborn inflation, high interest rates and general economic uncertainty.”
LendingTree
