Consumers default on car loans at an astonishing rate, with default value soaring to 2.3 million
- Last year, 2,332,837 auto loans defaulted, exceeding the level during the Great Recession.
- About 1.73 million cars were recovered, the highest level in a decade.
- Sales in March are expected to drop slightly from last year, but the future looks bleak due to tariffs.
Economists have been worried about the recession for years, and it seems that it will finally happen due to a mix of layoffs, tariffs and uncertainty. Warning signs are everywhere, and consumer confidence has recently reached a 12-year low.
Another alarm bell began to ring Cox Automobile Quietly revealing that “recovery rates return to 2019 levels, while auto loan defaults are even higher.” Mining figures, there were 2,332,837 auto loan defaults last year. It’s a stunning number that is even eclipsed during the peak of the Great Depression.
More: Record Americans lag behind auto loans
The default rate last year was 3.13%, the highest since 2011. However, this trend began with the Great Recession, as default rates jumped to 3.18% in 2007 and jumped to 3.76% in 2008. Then it reaches 4.12% in the second year and then slowly settles to 2%.
Since the repository and default values are together like peanut butter and jelly, it is not surprising to know that the collection rate surged last year. An estimated 1.73 million cars were brought back to their highest level since 2009 in 2024. The recovery rate was 2.3%, which also climbed to a level not seen in years.
Car loan default value
Despite these developments, Cox said sales in March are not expected to be significantly affected by the threat of tariffs or economic uncertainty. Still, they still expect a 1.4% drop compared to last year.
The future is as clear as Cox says: “According to the proposed tariffs throughout North America – depending on how long they last – can upend the U.S. auto market and the larger economy.”
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