Millions of Americans are drowning in car debt they can't actually afford, and it's bad news for buyers, lenders, and anyone whose retirement savings touch the auto loan market.

• Car repossessions hit 1.7 million in 2024, with Texas and Florida leading, as prices for new cars and trucks have shot up and wages haven't kept pace.
• Dealers push 7-year (84-month) loans to make sky-high prices look affordable, but buyers end up paying way more interest and owing more than the car is worth within a couple years.
• Banks package risky car loans into bonds and sell them to investors, the same trick that blew up the 2008 housing market, and subprime lender Tricolor already collapsed into bankruptcy and fraud charges.
• Missed payments are rising fast, and loan delinquency rates are now well above normal levels, with some pension and retirement funds exposed to this risky debt without people realizing it.
• Nearly 1 in 3 buyers trading in a car now owe more than it's worth, trapping them in a cycle of growing debt.

Outlook: Expect rising defaults and repossessions to keep flooding the used car market, pushing prices down slightly while raising the risk of a broader financial shock if the bad loans keep piling up.