Gen Z and millennials default on auto loans at far greater rates than before the pandemic
Young Americans’ finances may have started buckling under the weight of car loans — one more worry to contend with in this precarious economic environment.
Young Americans’ finances may have started buckling under the weight of car loans — one more worry to contend with in this precarious economic environment.
Generation Z and millennials today have auto loan delinquency rates that are significantly higher than their prepandemic levels, according to new data from the credit reporting agency TransUnion. Gen Z, which includes those born in 1995 and after, has a past-due rate of 2.21 percent, compared with 1.75 percent before the pandemic. Millennials, those born between 1980 and 1994, have fallen behind on car loans at a rate of 2.14 percent, compared with 1.66 percent before the pandemic.
The data stands against the backdrop of near all-time high automobile costs. The average new car now stickers at $46,526, just a bit off the record $47,000 reached in January, according to Kelly Blue Book and its parent company, Cox Automotive.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index hit its worst mark on record in April, showing the number of median weeks of income needed to purchase the average new vehicle now stands at 40.6 weeks — nearly one year’s worth of pay — from a downwardly revised 40.2 weeks in March.
“New-vehicle affordability continues to be much worse now than it was a year ago, when prices were notably lower and incentives were higher,” Cox said in a news release. “The estimated number of weeks of median household income necessary to purchase the average new vehicle in April was up 18 percent from last year.”
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