After an unprecedented borrowing spree, many Gen Z and Millennial drivers are struggling to make payments on their auto loans, pushing serious delinquencies among their age groups to multi-year highs. That’s as overall delinquency rates hit and surpassed pre-pandemic levels.
Both Gen Z and Millennials likely face a tougher road ahead. Gen Z drivers, especially, say car payments and other car-ownership costs, including insurance rates that are rising at the fastest pace in generations
, have created financial stress in other areas of their lives, causing them to cut back on spending and to struggle to make other monthly payments.
For now, the economy and labor market remain strong but many economists expect both to weaken significantly — perhaps resulting in a recession — as the Federal Reserve continues its quest to rein in inflation. And a long-running forbearance on student loan payments is set to expire in coming months, meaning borrowers will no longer be able to hold off on making payments without penalty. That will spread many younger car owners’ budgets even thinner.
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