Buying a car in the post-pandemic economy is expensive, and the data shows it’s catching up with people. A growing share of auto loans are going unpaid, with over 5% of all balances at least 90 days overdue in the third quarter, according to the latest analysis by the Federal Reserve Bank of New York. That’s the most for any quarter since 2020.

Americans are falling behind for multiple reasons, but the biggest is simply how quickly car prices have risen. In September, the average buyer paid over $50,000 for a new car — a record high and a good $10,000 more than they did in 2020. Analysts said tariffs have begun to work their way through the supply chain, though the average price was also inflated by a rush to buy pricier EVs before tax incentives expired at the end of September.

The spike in cost has had major ripple effects on financing, too. With monthly loan payments increasingly topping $1,000 a month, a growing number of people are opting to extend their loans in order to avoid that expense. In the second quarter, a record 22% of shoppers opted for seven-year loans rather than the more typical three- to five-year term, according to Edmunds data.

Not only do borrowers pay more overall interest when they extend their loan, but the longer the loan, the higher the interest rate tends to be. (Fewer financing incentives have also driven auto loan rates up — despite the fact that the Federal Reserve has started cutting benchmark rates.)

So what? Auto loans are often a necessity, given that many people can’t afford to buy a car outright and 45% of Americans lack access to public transportation. But there are risks, especially these days.

Since vehicle values decline with age, carrying debt on a car for an extended period puts you at greater risk of owing more on the loan than your car is worth. An underwater car loan can be especially problematic if you and your car part ways before you’ve paid it off. That was the case for more than one in four auto trade-ins in the second quarter of this year. When borrowers financed the remainder of their old loan with their new vehicle, it resulted in an extra large payment.

If you’re struggling to make your auto loan payments, contact your lender or servicer as soon as possible to see whether an arrangement can be made. You may be able to work something out before any missed payments damage your credit score — or force you to surrender your vehicle.

It’s also worth exploring your refinancing options. (SoFi’s marketplace helps you compare lender quotes quickly.) And remember: There are broader economic dynamics at play here. Rapidly rising prices, financing rates, insurance premiums and repair costs have made it harder for people to predict the cost of car ownership. Plenty of other people have also been caught off guard.

If you’re getting ready to buy a vehicle, here are some important things to keep in mind:

•  Shop far and wide: Don’t be afraid to take a road trip to search for more affordable cars. And check with as many lenders as you can to make sure you’re getting the best rates.

•  Prepare for dealership jiu-jitsu: You’re paying tens of thousands of dollars, so now’s the time to speak up. Try to negotiate incentives and question any markups you didn’t request. You may be surprised by how effective you are.

•  Explore selling your car rather than trading it in: The used car market is hot right now, and you’ll often get more money selling directly than by trading it in to a dealership, according to Edmunds. Check your car’s resale price and what dealers are offering, just to be sure.

•  Buy American-made to claim the new interest deduction: Through 2028, eligible borrowers can deduct up to $10,000 in auto loan interest on their taxes if they buy a new U.S.-made vehicle.

•  Consider all of your auto-related costs: If you’re taking on a bigger car payment — or a first car payment — don’t forget there’s more to it than that. Make sure you can afford car insurance, repairs and maintenance, gas, and registration fees.

Related Reading

Take Control of Your Auto Loan (Consumer Financial Protection Bureau)

Cost of Car Ownership Calculator (Edmunds)

Should You Refinance Your Auto Loan or Trade in Your Car? (SoFi)

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

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With Or Without You

The lyrics to one of U2’s most well-known songs include a line that goes, “I can’t live, with or without you.” During this government shutdown, that’s how the market feels about government economic data — or lack thereof.

As the longest shutdown in U.S. history comes to an end, we are left waiting and watching for the resumption of data releases on the labor market, inflation, and GDP, among other things. Since Oct 1, investors have had to rely on alternative data sources to piece together a view on how the economy is doing. And most data was not even being collected during the shutdown, so there’s a strong possibility we won’t see some October datasets at all.

Before the shutdown, investors (and the Federal Reserve) were hyper-focused on the labor market. They were looking for signs of weakness to gauge how much and how fast the Fed might cut interest rates. But without data from the Bureau of Labor Statistics, everyone has had to rely on ADP and Challenger, Gray, and Christmas for a read into labor market dynamics.

A recent dataset from Challenger raised some eyebrows because it showed a spike in layoffs which, unlike what we saw earlier in the year, was not driven by DOGE-related government cuts. This caused a minor speed bump in the S&P 500 and Nasdaq Composite indices, with both down between 1-2% the day of the announcement.

Challenger Job Cuts

Even when we’ve had government data available, there were short-term moves in data series that ended up being much ado about nothing, so we try not to overreact to a one-time change like this without digging deeper.

Twist of Fate

In this case, digging deeper presents a little more to worry about. Not only is it concerning that the number of job cuts was up 185% compared to September 2025, and 175% compared to October 2024, but cost-cutting became a much more common reason cited by the companies.

Reasons for Job Cuts by Percent Share

The second most common reason was AI-related cuts. This could be taken as both a positive sign that AI advancements are increasing productivity and a negative sign that the labor force is being impacted.

The main takeaways from this chart? These reasons are unlikely to be one-time “shocks” to labor data and the drivers of layoffs could be changing… and not for the better.

On a Bed of Nails She Makes Me Wait

One of the most watched datasets on the labor market is initial jobless claims that (usually) comes out weekly on Thursdays. It’s one of the series that will restart when the government reopens and has long been viewed as the best real-time view of layoffs in the U.S.

This got us wondering how well the data from Challenger might foretell what we see in upcoming initial claims reports. The answer appears to be: Pretty well.

Layoff Announcements Are Correlated to Jobless Claims

The relationship between these two datasets isn’t perfectly correlated, but the trends do tend to track each other quite reliably, especially when there is a spike. This would suggest that when we do start getting initial claims data again, we might expect a notable rise.

Since both of these potential spikes are so recent, it’s impossible to know whether the “problem” will persist or prove to be a one-time anomaly, but again, the reasons for the cuts are more concerning and do not suggest a brief hiccup in the data.

Given the laser focus on the labor market, the arrival of delayed or missed data could cause market bumps while everyone tries to digest the information and set new expectations. When it comes to government economic data, it truly seems that we can’t live with or without it.

Want more insights from Liz? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.

SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.

Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Thomas is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.

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