Americans Crushed by Auto Loans as Defaults and Repossessions Surge
49 comments
·September 15, 2025michaelt
lelanthran
> Perhaps it's because I grew up around people who were good with their hands, but in my mind buying a used car isn't a scary matter - you visit the private seller, you look at the vehicle, you check for the things one needs to check for, and you know if it has problems or not. And if you can't do this, you've got a cousin or uncle who can.
You could do that, sure. Or you could get a respected independent assessor. Here in South Africa we have Dekra (and others) who wil do a test of the car more thoroughly than I can (road test till operating temperature is reached, examination of the car on a lift for chassis damage/signs of repairs, oil leaks, etc, examination of car for signs of accident repair, pulling of DTC, etc).
If you go to this place - https://www.webuycars.co.za/buy-a-car/18C404984 - you'll see a car that looks good for its age on the surface with only a few easily fixable things (tail lights, brakes, etc). But the attached report shows that the chassis is twisted and that there are oil leaks. These two problems are terminal faults that I, even with a background as a mechanic, will not spot because I cannot put the car on a lift when I go to view it.
It's not perfect, but at least I don't waste time test driving a car with terminal faults (chassis damage, transmission DTCs or problems, engines without compression, etc).
It means when I look for a car, I can dismiss dozens of cars based just on the attached Dekra report, and spend more time examining the remaining ones for faults that Dekra might have missed.
nbadg
Additionally, a lot of people who would otherwise be in the used car market for price reasons in the US cannot afford to purchase even a used car outright, and getting financing for cars sold on the private market is, to my knowledge, not really possible.
lelanthran
> Additionally, a lot of people who would otherwise be in the used car market for price reasons in the US cannot afford to purchase even a used car outright, and getting financing for cars sold on the private market is, to my knowledge, not really possible.
To me, that's the biggest reason for used-car prices to be low - the market is restricted to those who have cash. IME, the prices of cars that cannot be financed (older than 5 years) is severely constrained. I've seen a 5 year old model advertised for exactly twice the price as an almost identical 6 year old model, with similar mileage and similar condition[1].
I find that hard to reconcile with the other posters in this thread who observed that used cars are still too expensive. Maybe they are looking at used-cars that can still be financed (under $X years, for example)?
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[1] Condition of both was reported by the same independent assessor - see my posting upthread
demarq
> round people who were good with their hands, but in my mind buying a used car isn't a scary matter - you visit the private seller, you look at the vehicle, you check for the things one needs to check for, and you know if it has problems or not.
This has nothing to do with America. The rest of the world has this problem too. Not everyone is a mechanic outside of America.
alex7o
Come to eastern Europe, nobody here buys a new car (people can't afford it unfortunately). For that exact reason most people have retained the knowledge of how to buy a used car, and choose one that is not awful, or at least the least bad one.
lifestyleguru
In Eastern Europe I regularly hear that car disintegrated into three pieces or engine fell off after a collision. These do not happen to a car having minor crash in its history, these happen to a car which had been totaled in the past. Eastern Europe is the scrapyard of Western Europe and yet its inhabitants found a way to fell superior about their 15 years old BMWs with engine mounted on three screws.
laurentiurad
I am originally from EE and there are reports every month on how cars cause accidents because breaks didn't work, or an entire wheel flies out of its place. Not to mention the gazillion cases of accidents caused by improper headlights.
The only reason the second-hand market works there is because most of the used cars come from Germany, and they have strict laws for checking the cars periodically. Once they roll on the EE roads for a few years, then the cracks start popping up which cause horrible accidents.
Just implying that EE is this amazing place where second-hand cars have no issues and Americans should follow the same model shows that you have no idea what you're talking about.
watwut
People in Eastern Europe buy new cars.
euroderf
> you visit the private seller, you look at the vehicle, you check for the things one needs to check for, and you know if it has problems or not. And if you can't do this, you've got a cousin or uncle who can.
I had good luck with taking a used car for a test drive, and (with the knowledge of the seller) dropping it off at a garage and asking a mechanic to spend half an hour checking it over.
IshKebab
Can't you just buy from a second hand car dealer? They usually give you more guarantees than private sales (for a slight premium). That's how most people in the UK buy cars.
ChiefNotAClue
You can, but it's usually a larger difference. A car that might be negotiated down to $5k or $6k on the private market, will probably be at $9k-$10k on the dealer lot. Plus they'll tack on document fees, and so on. In the end, you might be looking at paying double what you would otherwise for cars in similar shape and mileage.
Notjoanbaez
Could it be that, as we moved most of our consumption online the idea of visiting a dealer, garage or direct-seller, has become unnatural and intimidating ? Suddenly you are confronted with the messy, material and mechanical reality rather than the clean product pages, specifications and marketing pictures.
sgt
I don't know.. people have been buying used cars on Craiglist for as long as I can remember.
crinkly
This is how I roll. Turn up next to the £100k EVs at the office in my 15 year old turd.
I go on holiday 6 times a year for that money.
The 15 year old turd seems to go wrong less and cost less to fix when it does as well.
Havoc
Think people have a general aversion to buying secondhand. You see it in people building home servers too - preference for buying new even if eBay route would yield tangibly better bang per buck.
lm28469
The average interest rate on used car loans is above 10%, they do buy used, but it's even more of a scam
borispavlovic
Buy the car you can afford by paying in cash, or a small enough loan that even 10% will be manageable.
lm28469
This isn't the American way apparently, do you want to be a True American Patriot or some loser driving a shitbox
I still remember the first thing my bank offered me as a student in the US, a credit card, 25%+ apr, give that to a 18 years old clueless kid and you'll set them up for failure. The entire system is setup to make you think these interests rate are normal and that being in debt is a proper lifestyle
henry2023
I’ve got a group of friends in Huston and it’s pretty crazy to me that to them having a “car payment” is almost as expected as having a cellphone bill. One of them didn’t even recall the sale price of his main vehicule, he just knew he could afford the car payment.
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dnissley
The car market right now makes no sense to me. Interest rates are high, prices are high (inflation + tariffs), unemployment is rising, inventory is low, and yet car sales are booming? What gives? People panic buying before tariffs have a bigger impact?
fzeroracer
It's more that in America, cars are for the most part an inelastic commodity. It's very, very hard to hold a job and maintain your life without a car except in the densest of metro areas. Since the population is still growing, sales of cars keep going up and people get trapped in predatory loans or conditions. Used cars are also harder to find and more expensive, which pushes people into these predatory conditions.
I think it's a really poor indicator for the future. America literally cannot function without cars, and if people cannot afford cars they cannot afford to work.
apsec112
A ten year old Honda Fit is like $12K, pretty fuel efficient, and probably reliable and low-maintenance (I owned one until recently). People aren't buying $50,000 new Ford F-150s because they just need a working car to go to work and the grocery store.
MangoToupe
> People aren't buying $50,000 new Ford F-150s because they just need a working car to go to work and the grocery store.
Let me introduce you to half of my block. And I live in a city with fantastic public transit where you don't even need a car. I see those loan notices in mailboxes....
carabiner
It's millennials moving out of cities into the suburbs and deciding they need a car. Guess what the bestselling car in the US? Toyota RAV4.
freddie_mercury
The Ford F-series and Chevy Silverado both outsold the RAV-4 by significant margins.
Also the RAV-4 isn't a car, it is an SUV.
https://www.visualcapitalist.com/best-selling-cars-us-h1-202...
dnissley
"Car" typically means "passenger vehicle" in common parlance, at least in the US. A lot of truck sales like you point to are fleet sales for work vehicles, so this person is probably pointing more towards non-fleet sales, where the RAV4 is indeed the top seller.
bloqs
for some reason the one-two punch putdown style of this relatively pedantic reply has me in stitches
FirmwareBurner
> and yet car sales are booming? What gives?
Maybe some people need a car to get to work, plus maybe they also want good optics with it, not wanting to be perceived as "broke" by the rest, so they splurge on a new car without any thoughts on financial responsibility just to keep up appearances.
close04
It’s the optics part that breaks the camel’s back. Any decent car goes from A to B. Only expensive cars have the “optics”. The car is a status symbol that carries you around, and the poorest are the most “vulnerable” to need such a status symbol to compensate.
It mirrors perfectly the luxury fashion industry where more branded merchandise is bought by broke people than by rich ones (unbranded luxury goods are a different beast).
dnissley
I would disagree for a different definition of optics. As someone else who replied to me mentioned, the top selling vehicle in the US is the Toyota RAV4. Based on the many people I personally know who own them, this is a vehicle that says "I'm doing just fine thanks" even when that is very much not the case.
moltar
As I understand one of the primary reasons is also that people do not finish the previous car payments and just roll them forward to the next new car. Dealerships and loan makers of course enable that behaviour.
thelastgallon
Which eventually might be good? The repossessed cars will need buyers and they will offered at lower rates?
toomuchtodo
Nah, they will be sold into the used car market at whatever price the market will support while charging the highest interest rate possible.
From the report this is based on (pages 6-7), there are simply not enough cars to meet demand due to manufacturers constraining supply to maximize by price. Similar to new construction housing in the US. Tariffs make importing cheaper foreign made vehicles untenable. It’s an economic extraction doom loop.
Hamuko
Auto loans defaulting seems to suggest that the car market does not support the current rates and prices.
It's always surprised me, when talking to Americans online, how many people seem to feel they don't have access to the secondary car market.
Perhaps it's because I grew up around people who were good with their hands, but in my mind buying a used car isn't a scary matter - you visit the private seller, you look at the vehicle, you check for the things one needs to check for, and you know if it has problems or not. And if you can't do this, you've got a cousin or uncle who can.
But speaking to Americans, they make it sound like this kind of traditional working-class knowledge has been lost? A lot of folks seem positively scared of the second-hand market, and say that a $50,000 brand new car is going to save them money on maintenance.
Crazy high standards of living, in a sense!