• According to TransUnion data, persons aged 18 to 40 were at least 60 days past due on their auto loans in the first quarter of 2022.
• Gen Z, those born in 1995 and later, has a past-due percentage of 2.21 percent, up from 1.75 percent before the epidemic.

Young Americans’ finances may have begun to buckle under the weight of vehicle auto loan – another worry in this difficult economic situation.

According to recent TransUnion statistics, Generation Z and millennials have vehicle loan default rates that are much higher than their prepandemic counterparts. Gen Z, those born in 1995 and later, has a past-due percentage of 2.21 percent, up from 1.75 percent before the epidemic. Millennials, those born between 1980 and 1994, are defaulting on vehicle loans at a rate of 2.14 percent, up from 1.66 percent before the pandemic.

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The data is set against a backdrop of near-historically high automotive prices. According to Kelly Blue Book and its parent company, Cox Automotive, the typical new automobile now costs $46,526, barely shy of the record $47,000 set in January.

The Cox Automotive/Analytics Moody’s Car Affordability Index touched its lowest point on record in April, with the median number of weeks of income required to purchase the average new vehicle rising to 40.6 weeks – nearly a year’s 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.”

Despite these difficulties, the total amount of auto loans has decreased. According to TransUnion, the number of loans originated in the first three months of 2021 fell by 3% to 6.5 million from the same period the previous year.

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That may be sufficient for the Federal Reserve to determine that financial conditions have tightened as anticipated. Meanwhile, creditors appear to be responding to shifting conditions by extending various sorts of forbearance to borrowers, according to TransUnion.

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