A new report on household debt finds a record 7 million Americans are at least 90 days behind on their car loan payments.
Alana Frierson painfully recalls the day her car was repossessed.
“We were devastated. I was devastated,” she said.
A city worker in Fort Worth, Texas, she fell months behind on her loan payments when her husband got sick and was unable to show up for his job. Bankruptcy followed.
“If you don’t have any money saved, yeah, you’re screwed. You’re out on the street, or you’re walking,” Frierson said.
According to the Federal Reserve Bank of New York, there are now 1 million more people behind on payments by three months than there were in 2010 when delinquency rates were at their worst.
Economist Austan Goolsbee is a former Obama White House official at the University of Chicago. He said millions of car loan delinquencies, even for subprime high risk borrowers, is a warning sign.
“I don’t see you can see a number like that and think, and think, ‘Oh, everything is going hunky dory for everybody and we don’t need to worry about it,'” Goolsbee said.
The New York Fed said a large part of the problem involves borrowers under 30 who have low credit scores. They are just the kind of people who may find it hard to buy a car and pay off student loans at the same time.