Driven by Hype: CFA’s Flawed Auto Loan Narrative

Driven by Hype: CFA's Flawed Auto Loan Narrative

In a time when institutions - from the government agencies to the media to nonprofit groups - have credibility problems, imagine what happens when two of those said institutions, in this case USA Today and the Consumer Federation of America (CFA), get together.

Earlier this week the CFA released a highly sensationalized report, "Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies."

The report claims that "auto financing is at the 'breaking point.'" It tries very hard to build a case that it the result of vehicle finance lenders and auto dealers, and that historic numbers of consumers are angry and being harmed by implied, excessively high and unfair car loan payments and overly aggressive and unfair repossessions. This is simply not accurate. It is not supported by facts. And it is irresponsible of both CFA to make such claims and for USA Today to validate them.

Vehicles are expensive due to a number of factors, not the least of which are new and innovative technologies (think electric and hybrid vehicles) in performance and safety. Safety and fuel efficiency regulations add costs for manufacturers. And over the past decade supply chain disruptions have affected availability and pricing for many products, including vehicles.

CFA choses to downplay if not wholly ignore all of these considerations.

The CFA does correctly note that aggregate auto debt is currently $1.66 trillion, second only to mortgages as the largest category of consumer debt. It is also true that, aside from their home, a vehicle is one of the most valuable assets a typical consumer holds. In addition to its monetary value, a vehicle provides transportation services, adding to a vehicle's value. As CFA itself states, "Access to a vehicle is a critical component of economic success for American consumers."

But then things veer quickly off the road. CFA claims that the level of auto debt represents a "crisis." However, auto debt levels are not out a line with the historical record. According to the Federal Reserve Bank of Philadelphia's Consumer Credit Explorer, a data source cited by CFA, average total auto debt was $18,900 in inflation-adjusted terms in the first quarter of 2025, barely above its level 20 years ago. Moreover, the average inflation-adjusted auto debt burden is at or below levels in 2023 and 2024.

CFA's analysis of auto loan performance similarly lacks context. According to the Federal Reserve Bank of New York Household Debt and Credit Report, 5 percent of aggregate auto loan balances were severely delinquent (90 days or more), in the second quarter of 2025, unchanged from the previous quarter. This figure is actually lower than immediately prior to the pandemic in 2020, a period generally considered to have been economically healthy.

The New York Fed report also indicates that the share of balances becoming delinquent is moving lower. In the second quarter of 2025, 2.93 percent of auto loan balances transitioned into serious delinquency, the second straight quarter in which the rate decreased. The share of balances transitioning into early delinquency, 30 or more days, decreased for the third quarter in a row in the second quarter of 2025, falling to 7.9 percent. In other words, while CFA and USA Today claim consumers are in crisis, indicators of borrower distress stabilized, and even improved, in the first half of 2025.

CFA appears to cite data on consumer complaints about vehicle loans to the CFPB as evidence of "egregious auto financing conduct." However, such data do not constitute an accurate measure of consumer satisfaction with automotive finance, nor does CFA or USA Today attempt to do so. Currently, there does not seem to be any quality control on submissions to the CFPB consumer complaint portal. A complaint submitted to the portal is not vetted to assure (1) that its author is a human being, (2) that the author actually has an account with a financial institution, (3) that the alleged complaint actually relates to the provision of a consumer financial product or service offered by the named company, (4) that the communication is actually a complaint, as opposed to an inquiry or request for an explanation, and (5) that any of the factual allegations in the complaint occurred.

All of which is to say CFA and USA Today did a great disservice to facts and research by pushing a flawed, inaccurate narrative of misinformation that contributes nothing to furthering consumer protection or education.

September 11th, 2025