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Negative Equity Findings from the Auto Finance Data Pilot

Americans owed more than $1.6 trillion on auto loans through the fourth quarter of 2023, with more than 100 million active auto finance accounts. Despite the size and prominence of this market, detailed information about the market is limited or non-existent.

In February 2023, the CFPB launched the Auto Finance Data Pilot and issued nine market monitoring orders to three banks, three finance companies, and three captive lenders to provide information about their auto lending portfolios. This allows the CFPB to examine trends that may create risks for consumers, including a better understanding of loan attributes that may result in increased consumer distress.

This report is the first of a series using data from the collection and provides a detailed analysis of financing negative equity, where the trade-in value offered for a consumer’s vehicle is less than the outstanding loan balance and the unpaid balance is rolled into the new loan. Including negative equity in financing can place consumers further underwater on their next loan which, for example, may increase the risk of a deficiency balance if the consumer cannot repay the loan.

Full report

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