U.S. consumers owe a record $1.66 trillion in auto loan debt, according to the Consumer Federation of America, making it the largest category of consumer debt after mortgages. Nearly one in five (19.3%) borrowers have monthly car payments of at least $1,000, quadruple the number in 2019.
Auto lending is in turmoil, with delinquencies and defaults rising across income levels and credit tiers. Some 2.2 million cars have been repossessed so far this year — the highest number since the Great Recession.
Many borrowers are hoping the back-to-back rate cuts instituted by the Federal Reserve in September and October will create an inviting atmosphere for refinancing. When the Fed lowers its benchmark federal funds rate, interest rates on auto…