JUST IN: US auto loans have exploded to $1.68 TRILLION. For the first time in history, car debt is bigger than credit card debt.
u/TonyLiberty ·
Reddit — r/FluentInFinance
· May 09, 2026 at 18:45
· ⬆ 140 pts
· 💬 30 comments
| View on Reddit ↗
AI Summary
Summary
The post highlights that US auto loans have reached a record $1.68 trillion, surpassing credit card debt for the first time, with 7-10 year loan terms and $735/month average payments.
Author’s thesis: Consumers are overleveraged on rapidly depreciating assets, and the “American Dream” is being financed by high-interest debt, leading to rising repossession rates (30-year high) and unsustainable car prices (+35% since 2020).
Quality assessment: Well-researched commentary citing verifiable macro data (NY Fed, industry reports) – a credible, bearish signal on consumer credit health and auto sector fundamentals.
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US auto loans have exploded to $1.68 TRILLION. For the first time in history, car debt is bigger than credit card debt.
It now matches the total amount of U.S. student loans.
People are taking 7-10 year car loans just to afford a monthly payment.
The average American now pays $735/month just to own a car. That’s $88,200 over 10 years. On something that LOSES value every single day.
Meanwhile....
Car prices are up 35%+ since 2020 and repossession rates hit a 30-year high last year.
Let that sink in.
The "American Dream" is being sold back to you on high-interest debt.
Auto loan debt exploded to $1.68T; Ally Financial is a top US auto lender heavily exposed to subprime and long-term loans. Rising repossession rates and stretched loan terms increase default risk, compressing Ally’s net interest margins and raising loan loss provisions. Short Ally as a direct bet on deteriorating consumer credit quality in auto lending. Fed rate cuts could ease consumer payments; a strong labor market delays defaults.
Auto loan stress and record debt levels will reduce new car sales, especially financed purchases. The First Trust NASDAQ Global Auto Index (CARZ) tracks major automakers and suppliers; lower demand and higher financing costs hurt earnings. Short the auto sector ETF as a broad hedge against consumer auto spending contraction. EV subsidies or trade policies could boost specific automakers; a recession may already be priced in.
Car prices up 35% since 2020; repossession flood will increase used car supply, pushing prices down. CarMax’s business model relies on healthy used car margins; price declines squeeze margins and inventory write-downs. Short CarMax to profit from used car price deflation driven by repossession influx. CarMax’s retail financing arm may cushion; supply chain disruption could limit new car supply.
This Reddit post, published May 09, 2026,
features u/TonyLiberty
discussing ALLY, CARZ, KMX.
3 trade ideas extracted by AI with direction and confidence scoring.