New car shoppers continue to pay record levels, and many are funding their purchases with record-level loan amounts that teeter into delinquencies and eventually, negative equity, or owing more than the car is worth. Recent reports from Edmunds and Bloomberg found that high interest rates coupled with high new car prices and cooling used car values have found many Americans upside down on their car loans. 

“Even if the US economy avoids a recession this year, consumers will likely struggle to make payments on their auto loans, especially with the Federal Reserve planning to keep raising interest rates,” Bloomberg reported on Thursday. 

The average new car interest rate rose to 6.5% in Q4 of 2022, up from 4.1% a year earlier, according to data from Edmunds. The confluence of high new car prices and higher interest rates means that borrowers owe more and are taking out…

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