The Car Market Is Broken and It’s Hurting More Than Just Drivers
If you’ve tried to buy a car recently, you already know the car market is broken. Prices are sky-high, loan payments are crushing household budgets, and delinquencies are climbing faster than ever. What used to be a sign of progress buying a new car has turned into one of the most financially damaging moves most people can make today.
Rising Vehicle Prices and Record Delinquencies
As of 2025, the average new car price has climbed above $50,000 up more than 31% since 2019. Meanwhile, the average monthly payment has crossed $700, and auto loan delinquencies have reached a historic high of 6.4%. That means more Americans are behind on their car payments than at any point in recorded history.
Cars used to be essential tools for mobility. Now, they’re financial traps on wheels. Between inflated prices and massive interest rates, more drivers are falling into debt they can’t escape.
How We Got Here: A Broken Market by Design
To understand how we reached this point, you have to look back a few years. In 2019, the average new car cost about $38,000, and a monthly payment hovered around $554. Then came the pandemic. Factories shut down, supply chains collapsed, and a global chip shortage crippled production.
Low inventory drove prices up and people were willing to pay anything. Cars became temporary “assets.” For a short time, some used cars sold for 30% more than their original purchase price. But that moment didn’t last. As production returned, prices didn’t come back down they just got baked into the market.
The Ripple Effect: Auto Loan Defaults and the Economy
The fallout from this broken system is spreading fast. Subprime auto loan defaults those from borrowers with poor credit are now hammering lenders. Companies like Tricolor have already filed for bankruptcy as delinquency rates soar.
The auto industry isn’t just about cars it’s a major pillar of the U.S. economy. Auto loans are the second largest category of household debt after mortgages. When people can’t make their payments, it sends ripples through banks, investors, and the broader economy.
In 2024, America saw the highest number of car repossessions since 2009. Think about that: we’re seeing financial distress levels not witnessed since the Great Recession, all because of a product that loses value the moment you drive it off the lot.
The Financing Trap
Faced with record prices, consumers have turned to creative (and risky) financing methods. Over 20% of all car loans are now stretched to 7 years even though most people won’t keep their cars that long. That means millions of people are still paying for vehicles they no longer own.
To help, the government recently introduced a tax deduction for car loan interest, but let’s be honest that’s a Band-Aid on a bullet wound. The real issue isn’t the interest rate; it’s the mindset that says “financing” a depreciating asset is normal.
The Harsh Math of Car Financing
Let’s break it down: if you finance a $50,000 car, you’ll pay roughly $75,000 over the loan’s life. Five years later, that same car might be worth $20,000 meaning you’ve lost $55,000 in value. You could have used that money to buy a used car and invest the difference. Instead, you’ve paid for something that’s guaranteed to lose value every single month.
Cars are not investments they’re expenses. And the sooner you treat them that way, the faster you can get ahead financially.
A Smarter Way Forward
If you want to build wealth, the answer isn’t a shiny new car with a big payment. It’s ownership of assets that grow in value. Buy used cars with cash whenever possible. Skip the $700 monthly payment and invest that money instead. At a modest 8% annual return, $700 a month could turn into nearly $125,000 in 10 years.
That’s how wealth is built not through luxury purchases, but through disciplined investing.
Final Thoughts: From Consumers to Investors
The car market might be broken, but your financial future doesn’t have to be. The system is designed to keep you financing not owning. To win, you have to play a different game. Be the investor, not the debtor. Skip the depreciating assets. Build real wealth through ownership, patience, and strategy.
Because when everyone else is drowning in car debt, the smartest move you can make is driving your paid-off car all the way to financial freedom.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
