It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile.
I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot more free in many ways. Places are more accessible not less.
I can't imagine being on the bottom rung of society and having yet another awkward expense, especially because you become unreliable if you don't properly invest in the maintenance of the thing. Which might cause you to lose your income altogether.
I'm surprised it has taken this long. Everything I thought I knew about economics (and basic finance) has pointed in the direction of imminent pain for consumers, but what I've been hearing is more of a dull ache at most.
I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.
As if I need to make another comment about a, or multiple bubbles, but something has to give and here it's of course the consumer. New and used car prices are at all-time highs (nominal it sounds like, but tell that to someone whose wages haven't kept pace (i.e., almost everyone)). Housing prices are at all-time highs (in terms of price:income so no qualifier needed there). Tariffs are not being 100% eaten by the producers (duh), nor by the importers (double duh), and so the consumer is being hit by those. Health care costs are about to rise materially as we flip to 2026 for large swaths (all?) of the US population. Any tax relief seen by the average consumer is likely not even close to enough to counterbalance all the increased prices/costs.
HN is fond of saying that the only thing propping up the US economy at this point is AI investment (not informed enough to know if that's actually true, but outside of equity prices it sure seems like everything else is blinking "this economy sucks.").
So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?
One thing the article doesn't mention is deportees. The administration always says illegal immigrants but when you look the vast majority that are being deported are documented people here under some allowed process, they just haven't been granted a green card yet. Documented immigrants have work permits, social security cards, all the thing to find housing, get jobs, engage in banking etc...
When they're picked up and going to be deported, do you think they're going to care about their car loan, home mortgage or credit card debt? Not even a little bit. I had a friend here awaiting asylum for 7 years. She was picked up by ICE, sat for 3 months in detention, finally just agreed to leave because that's was long enough to be evicted by her apartment (and get significant fees for it) be defaulted on her credit cards, and on her car loan.
Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country, finds a decent paying job because she has years of experience in the US and now speaks English. All very valuable skills to a lot of employers in central and south America.
Expect to see a lot more loans being defaulted on. We were lied to about the number of illegals. Now we're going to see the effect of deporting people who were working, participating in the economy, and happy to be here. All because the lies saying they were illegal.
https://fred.stlouisfed.org/series/DRSFRMACBS home loans delinquencies look amazing right now, to the surprise of noone, since everyone is sitting happy having locked in their 3% rates a few years back.
My understanding is that Tricolor went under due to systemic fraud ("The core of the fraud allegations is that Tricolor illegally used the same loan portfolios as collateral for separate credit lines with multiple banks" to the tune of ~$200M)
First Brands also went under due to fraud ("First Brands had relied on billions of dollars in undisclosed debt, primarily from the private credit market, by borrowing against its invoices. This practice, known as factoring, kept the debt off the company's official balance sheet")
Yes, things feel tighter than they did in the years immediately post-Covid because there was a lot of free $ in the system, a lot of debt collections were paused, and Covid went on long enough for people to start treating that as the new normal when that was never going to be the case.
No, I don't see these as canaries for a 2008-esque event.
The scary thing to keep an eye on is commercial office space debt (e.g. https://finance.yahoo.com/quote/HPP/) which is likely to cause a cascade of fire sales as 5/10 yr debt obligations come due and how that will have cascading effects on commercial bank loans. That will be a hairy situation, but, fortunately, once it passes, rents in downtown areas will plummet and there will be a huge surge in growth in response to more favorable rents. Right now, commercial rents are locked into untenable rates because the loans are contingent on those rates which is resulting in 30%+ unused commercial space in areas like downtown SF.
Related: U.S. Consumers Are Collapsing: Cars, Credit, & the Chaos Ahead | The Weekly Wrap - Steve Eisman (Steve Carell’s character from The Big Short) interviews Lakshmi Ganapathi. Uploaded 2025-10-03.
I once clicked on a YT video about irresponsible debts, apparently it's a popular genre there, don't do it or you'll get a flood of these for a few weeks minimum. The interesting note I saw there was that apparently in USA car credits are now reaching into 7 and 8 years length (from typical maximum of 5 or so) and their rates are reaching well into 20% or higher. And that's not on a housing, that's on depreciating expensive cars. Another new idea for me was the fact that people with car debt, are doing "trade-in" of sorts, giving up old unpaid car for a newer better one, with an even bigger total debt. That was really eye opening stuff.
Funny how a lot was going really well thanks to the last administration. Full employment, hot economy, and administration going after the billionaires. Wow...so much has changed in a year. We piss off the world, we implement tariffs hapharzardly, car and car prices soar and the rich get richer. Brace yourself....
> "Distress in auto lending broadly is often seen as a bellwether to changing circumstances in the US economy, because Americans particularly in the lower-income brackets tend to put their highest priority in auto payments," said Brett House...
Or, put another way, when the bills come in, people make their car payments first, because they have to get to work. So either there are other bills people aren't paying, or people aren't going to work. Both seem bad. One purported cause of increased auto loan defaults is that people are having to make student loan payments again, although that would suggest they aren't prioritizing the auto payments.
This goes way beyond the high price of cars or people taking out loans with bad terms.
Americans are struggling all over. Rent is skyrocketing. Inflation is applying massive pressure on regular expenses. Household debt is at an all time high. People all over the country are struggling to keep their utilities connected as energy prices soar. Foreclosures are surging. Individual chapter 7 bankruptcy filings are up 15% from last year too. It's really no wonder repossessions are spiking too.
Economically, things look pretty bleak for a huge percentage of Americans and I'm not seeing much to convince me that they're going to get better any time soon.
Auctions. Sometimes bought by private buyers, sometimes by dealers who then on-sell them. Government and corporate fleet vehicles are usually sold at auction as well, likely mandated after a few years or mileage figure.
18 comments
[ 0.21 ms ] story [ 90.5 ms ] threadI'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot more free in many ways. Places are more accessible not less.
I can't imagine being on the bottom rung of society and having yet another awkward expense, especially because you become unreliable if you don't properly invest in the maintenance of the thing. Which might cause you to lose your income altogether.
I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.
Exceedingly dishonest. It was problems in the CDO market.
> "When you see one cockroach, there are probably more,” Jamie Dimon,
Exceedingly ironic.
HN is fond of saying that the only thing propping up the US economy at this point is AI investment (not informed enough to know if that's actually true, but outside of equity prices it sure seems like everything else is blinking "this economy sucks.").
So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?
When they're picked up and going to be deported, do you think they're going to care about their car loan, home mortgage or credit card debt? Not even a little bit. I had a friend here awaiting asylum for 7 years. She was picked up by ICE, sat for 3 months in detention, finally just agreed to leave because that's was long enough to be evicted by her apartment (and get significant fees for it) be defaulted on her credit cards, and on her car loan.
Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country, finds a decent paying job because she has years of experience in the US and now speaks English. All very valuable skills to a lot of employers in central and south America.
Expect to see a lot more loans being defaulted on. We were lied to about the number of illegals. Now we're going to see the effect of deporting people who were working, participating in the economy, and happy to be here. All because the lies saying they were illegal.
https://www.lendingtree.com/auto/debt-statistics/
The main pattern is that people are paying a lot for cars. Looks like a lot of 6 year+ loans in the new market.
https://www.washingtonpost.com/business/2025/10/17/50000-new...
Starting to find out the risks of a car-centric society in a slow-burn economic crisis.
https://fred.stlouisfed.org/series/DRCCLACBS credit card delinquencies are similar
https://fred.stlouisfed.org/series/DRSFRMACBS home loans delinquencies look amazing right now, to the surprise of noone, since everyone is sitting happy having locked in their 3% rates a few years back.
My understanding is that Tricolor went under due to systemic fraud ("The core of the fraud allegations is that Tricolor illegally used the same loan portfolios as collateral for separate credit lines with multiple banks" to the tune of ~$200M)
First Brands also went under due to fraud ("First Brands had relied on billions of dollars in undisclosed debt, primarily from the private credit market, by borrowing against its invoices. This practice, known as factoring, kept the debt off the company's official balance sheet")
Yes, things feel tighter than they did in the years immediately post-Covid because there was a lot of free $ in the system, a lot of debt collections were paused, and Covid went on long enough for people to start treating that as the new normal when that was never going to be the case.
No, I don't see these as canaries for a 2008-esque event.
The scary thing to keep an eye on is commercial office space debt (e.g. https://finance.yahoo.com/quote/HPP/) which is likely to cause a cascade of fire sales as 5/10 yr debt obligations come due and how that will have cascading effects on commercial bank loans. That will be a hairy situation, but, fortunately, once it passes, rents in downtown areas will plummet and there will be a huge surge in growth in response to more favorable rents. Right now, commercial rents are locked into untenable rates because the loans are contingent on those rates which is resulting in 30%+ unused commercial space in areas like downtown SF.
https://www.youtube.com/watch?v=Qd7akdDtPXA
Or, put another way, when the bills come in, people make their car payments first, because they have to get to work. So either there are other bills people aren't paying, or people aren't going to work. Both seem bad. One purported cause of increased auto loan defaults is that people are having to make student loan payments again, although that would suggest they aren't prioritizing the auto payments.
Americans are struggling all over. Rent is skyrocketing. Inflation is applying massive pressure on regular expenses. Household debt is at an all time high. People all over the country are struggling to keep their utilities connected as energy prices soar. Foreclosures are surging. Individual chapter 7 bankruptcy filings are up 15% from last year too. It's really no wonder repossessions are spiking too.
Economically, things look pretty bleak for a huge percentage of Americans and I'm not seeing much to convince me that they're going to get better any time soon.