One thing, however, is in little doubt: More Americans are struggling to make their car payments. Banks have warned for months about a potential wave of missed loan payments.

Now, the most recent data from Cox Automotive, for January, shows that the delinquency rate for loans 60 or more days past due was up 2% from December—and up 20.4% from a year ago. Of delinquent loans, 1.89% were severely delinquent, an increase from 1.84% in December and the highest rate back to 2006.

Among subprime loans in January, 7.3% were severely delinquent, an increase from 7.11% the month before, and the rate was also the highest back to 2006. 

Last week, American Car Center—a used car retailer that targeted consumers regardless of their credit history—unexpectedly went out of business, leaving customers across the country confused about how (and to whom) to continue making their payments. 

Defaults and repossessions

Loan defaults, meanwhile, increased 6.2% in January from December and were up 33.5% from a year ago, according to Cox Automotive.

Automobile repossessions, not surprisingly, are climbing. At the auto auction firm Manheim, the number of repossessed cars increased 11% in 2022 compared to the prior year, according to Bloomberg.

High interest rates have played a role in Americans struggling with their car payments. The average interest rate increased 12 basis points to 9.51% in January, according to Cox Automotive, following a jump of 53 basis points in December.

In the fourth quarter of last year, 15.7% of consumers who financed a new vehicle committed to a monthly payment of $1,000 or more—the highest it’s ever been, up from 10.5% and 6.7% in the last quarters of 2021 and 2020, respectively, according to Edmunds.

“Because these car loans are generally unaffordable at the outset, that means that every month, borrowers are getting closer to the financial edge,” said Kathleen Engel, a law professor at Suffolk University, told Bloomberg.

News emerged this week that Ford has filed for a patent on technology that could essentially harangue drivers about missed car payments. It could be used to remotely shut down a vehicle’s air conditioning, radio, or engine, or beep incessantly. The wide-ranging patent application even proposes that an autonomous vehicle could drive itself to a location that’s “more convenient” for a tow truck to collect it. 

“We submit patents on new inventions as a normal course of business, but they aren’t necessarily an indication of new business or product plans,” Ford said in a statement.

But as Americans struggle to make their car payments, the news is hardly reassuring.