Smarter, AI-native debt collection solutions for automotive

In the US alone, total auto loan debt has ballooned to an unprecedented $1.64 trillion as of early 2025, surpassing student loan debt to become the second largest category of consumer debt after mortgages. This massive debt load reflects Americans’ increasing reliance on financing to purchase vehicles whose average prices have soared past $49,000.

The debt crisis is particularly acute among younger borrowers, with those under 40 experiencing the steepest increases in vehicle-related debt, up 41% since 2019 to an average of $24,000. Many borrowers are now trapped in cycles of negative equity, owing more on their loans than their vehicles are worth, with over half of used car loans carrying loan-to-value ratios exceeding 120%.

The roots of this crisis trace back to pandemic era lending practices when financial institutions loosened credit standards and vehicle prices skyrocketed due to supply chain disruptions. As pandemic relief measures ended and inflation persisted, borrowers found themselves struggling with higher monthly payments—averaging $745 for new vehicles and $521 for used cars—while facing elevated costs for essentials like housing and food.

The auto debt crisis serves as a canary in the coal mine for broader economic distress. A global deterioration in payment performance, combined with rising repossession rates and mounting negative equity, threatens to create ripple effects throughout the economy, potentially impacting everything from housing markets to broader consumer spending patterns.

Industry experts warn that these challenges could rival the impact of previous financial crises, signaling the dream of car ownership has become a financial nightmare for millions.

It’s more important than ever to understand the importance of a smart debt collections solution and the role agentic AI plays in managing delinquent car loans.