The Car Loan Apocalypse Is Here | Episode 1107
About this episode
Rising auto-loan risk meets looser approvals as credit availability hits a 10-year high and approval rates climb toward the mid-70% range. Hosts connect the “apocalypse” to longer terms, higher average interest (around 10.68%), and growing borrower stress signaled by negative equity, subprime delinquency, and more repossessions. They run loan-payment math on vehicles like a $51,497 Outback and a $63,198 car with dealer markup, showing how monthly “affordable” payments can hide thousands in extra interest.
credit availability
"We have the highest level of auto credit availability on the index as reported by DealerTrack in its entire history of more than a decade here. So you can see we're at some of the highest levels of this particular index."
This is basically a score for how easy it is to get a car loan. Higher numbers mean more people are getting approved and banks are more willing to lend.
Auto credit availability is a measure of how easy it is for consumers to get auto loans and for lenders to approve them. In this segment, it’s presented as an index level reported by DealerTrack, used to gauge tightening or loosening in car lending.
Dealer Track
"We have the highest level of auto credit availability on the index as reported by DealerTrack in its entire history of more than a decade here."
DealerTrack is a company that tracks and reports data used in car sales and car financing. In this episode, they’re the source of the lending data the hosts are quoting.
DealerTrack is a data and technology provider used in the auto lending and dealership ecosystem. Here, it’s cited as the source for an index tracking auto credit availability over time.
approval rate
"you can more than likely get financing. Like you said, the approval rate is almost 74%, which is up significantly from where it's been historically."
Approval rate means the share of people who apply for a car loan and actually get approved. A higher approval rate means it’s easier to get a loan.
Approval rate is the percentage of auto loan applications that lenders approve. The hosts use it to argue that getting financed is easier now than in the recent past.
interest rates
"Back in 2015, interest rates were next to nothing. An average interest rate might have been 3%, 2.5%, 3%, maybe 4%."
Interest rate is the extra cost you pay for borrowing the money to buy the car. Higher interest rates make the loan more expensive overall, even if you get approved.
Interest rates are the percentage cost of borrowing money on an auto loan. The segment contrasts much lower rates around 2015 with current rates around 10.68%, explaining why monthly affordability can worsen even when approvals are easier.
basis points
"Approval rates you mentioned that I touched on in a second ago were up to 74%. This is 170 basis points up month over month. 170 basis points is 1.7% up month over month."
Basis points are a way to measure small changes in rates. One basis point is 0.01%, so 170 basis points is about a 1.7% change.
Basis points are a unit used to express changes in interest rates and lending metrics, where 1 basis point equals 0.01%. The hosts convert 170 basis points into about a 1.7% month-over-month change to make the movement easier to understand.
subprime share
"Subprime share, this is a little bit of good news generally speaking, went down 10 basis points month over month. So fewer people with subprime loans are actually getting approved in this current environment."
Subprime share is the portion of loans going to people with lower credit scores. If it’s going down, it usually means fewer higher-risk borrowers are being approved.
Subprime share refers to the portion of auto lending approvals (or loan population) associated with borrowers considered higher risk due to weaker credit profiles. The segment says it fell month over month, implying fewer higher-risk borrowers are getting approved.
yield spread
"Yield spreads, how much money they're making on these, we won't touch on that."
Yield spreads are basically how much extra money lenders make on loans compared to a baseline rate. It’s a profitability measure, not a borrower-friendly metric.
Yield spreads are the difference in return (yield) between different lending products or between a loan and a benchmark rate. In auto finance, they’re often used to describe how much profit lenders earn relative to their funding costs.
72 months
"where at 31.1% of all auto loans are 72 months or longer. So actually, you know what? If I may, ... you can't keep signing up nearly a third of all loans for longer than 72 months at an average rate of 10.68%."
“72 months” means the loan lasts about six years. A longer loan can make the monthly payment smaller, but it also means you’re stuck paying for longer and can end up owing more than the car is worth.
“72 months” refers to a six-year loan term. Longer terms can lower the monthly payment, but they extend the time you’re paying interest and increase the chance that the car’s value may drop below what you still owe.
auto loans
"where at 31.1% of all auto loans are 72 months or longer. So actually, you know what? If I may,"
An auto loan is money you borrow to buy a car, then pay back each month. This episode uses loan statistics to explain why car debt may get worse later.
Auto loans are financing agreements used to pay for a vehicle, typically repaid in monthly installments over a set term. In this segment, the host is using auto-loan data to argue that longer loan terms can increase future financial stress.
default rates
"Maybe there already is a little bit of an auto loan apocalypse because we've seen default rates and loan and repossessions and things like that increase so much."
Default rates are how often people stop paying their car loans. If that number goes up, it usually means more borrowers are getting into trouble.
Default rates measure the share of borrowers who fail to make required loan payments. Rising default rates are a key indicator of mounting financial stress in auto lending.
10.68%
"You can't keep signing up nearly a third of all loans for longer than 72 months at an average rate of 10.68%. People will sign on the dotted line."
10.68% is the interest rate on the car loans. Interest is the extra cost of borrowing money, so a higher rate usually makes the loan more expensive overall.
10.68% is the average interest rate on the auto loans being discussed. A higher rate increases the total cost of borrowing and can make it harder for borrowers to stay current if their finances tighten.
cost to ensure
"The cost to fuel cars today is higher than it's been in recent years. The cost to ensure that car has gone up 30 or 40% in the last three or four years."
This is talking about insurance—what you pay to have the car covered. The point is that insurance costs have gone up, making the overall monthly burden bigger.
“Cost to ensure” here is referring to insurance cost—what it costs to insure the vehicle. The host argues that insurance has risen sharply, adding to the total cost of ownership beyond the monthly loan payment.
debtors prison
"And this is where people put themselves in debtors prison. I mean, it's like, sign me up for the loan, lock the jail cell behind me and throw away the key."
“Debtors prison” is a metaphor for feeling trapped by debt. The host’s point is that car loans can become hard to get out of when costs rise and the car’s value falls.
“Debtors prison” is a metaphor for being trapped in debt where the borrower can’t easily escape the financial obligations. In this context, the host suggests that high total costs and negative equity can keep people stuck even after signing the loan.
cost of ownership
"We have all this cost of ownership data back on the car. It's like that can help you make a more informed decision."
Cost of ownership means the real total cost of having a car over time. It includes things like repairs, gas, and insurance, not just the loan payment.
Cost of ownership is the total cost to run and maintain a vehicle over time, including expenses like repairs, fuel, insurance, and maintenance—not just the purchase price or monthly payment. The host frames it as crucial for understanding how borrowers can get into trouble later.
Cox Automotive
"I want to share two more data points from this latest data we have from Cox Automotive to inform the conversation. Negative equity share."
Cox Automotive is a company that collects and analyzes car-industry data. In this episode, the host uses their numbers to talk about how car loans are doing.
Cox Automotive is a major automotive data and analytics company that tracks trends across car sales, financing, and ownership. The host cites its latest data to support the claims about loan performance and negative equity.
negative equity
"suggests that when it comes to negative equity, we have many folks that are 5, 10, 15, $20,000 upside down on their auto loans. If I remember correctly, those who have negative equity,"
Negative equity means your car is worth less than what you still owe on the loan. If you try to sell or trade it in, you still have to pay the difference.
Negative equity is when you owe more on your auto loan than the vehicle is worth. That gap can make it harder to refinance or trade in, because you effectively carry the loss forward into the next deal.
down payment percentage
"And then the other piece of news here is the down payment percentage. It actually declined. So we have less money being put down on these vehicles."
Your down payment percentage is how much you pay at the start when buying the car. If it’s lower, you usually borrow more money, which can make the loan riskier.
Down payment percentage is the share of the vehicle’s purchase price paid upfront rather than financed. A lower down payment generally increases the loan amount and can worsen negative equity risk if the car’s value drops.
captives
"Now, not all lenders are the same. You've got the channel pipe here, breakdown, which is super interesting as well. And so you can see certain lenders are getting a little bit more aggressive than others. For example, captives are up 1.8%,"
Captives are car-company financing arms that offer loans through their own brand. They may approve loans differently than other banks or lenders.
Captives are auto finance companies affiliated with automakers that provide loans or leases through the brand’s dealer network. Because they’re tied to specific brands, their underwriting and pricing can differ from independent lenders.
independence
"captives are up 1.8%, up 14.9% year-over-year independence are up 2.2%. So it becomes easier to get certain types of auto loans in today's environment as well."
Here, “independence” likely means lenders that aren’t tied to a specific car brand. The point is that different lender types are behaving differently.
In this context, “independence” appears to refer to independent lenders (non-captive financing sources). The speaker is comparing how different lender types are changing their auto-loan activity year over year.
auto loan delinquencies
"he puts out, excuse me, some of the best information when it comes to what's going on in auto loan delinquency, finance, things like that. June 2026 posted a 5.67% subprime 60-day or greater delinquency rate,"
Delinquency means people aren’t paying their car loan on time. When it rises, it often leads to more cars being taken back.
Auto loan delinquency is when borrowers miss scheduled payments and fall behind. The segment treats it as a leading sign of broader problems, since rising delinquency often precedes more repossessions.
subprime delinquency rates
"June 2026 posted a 5.67% subprime 60-day or greater delinquency rate, the second highest June on record from 1994 to 2026."
This is a measure of how many higher-risk borrowers are missing payments by two months or more. A higher number usually means more financial trouble in the loan market.
The subprime 60-day delinquency rate measures the percentage of loans from higher-risk (subprime) borrowers that are at least 60 days past due. It’s a key indicator of credit stress and how likely borrowers are to fall behind.
heat map
"Below, I'm going to show you a heat map covering the last 390 months showing subprime auto loan delinquencies. Green is good, red is bad."
A heat map is a chart that uses colors to show where things are getting worse or better. In this case, it shows delinquency levels over many months.
A heat map is a data visualization that uses colors to show intensity across time or categories. Here it’s used to highlight how subprime auto-loan delinquencies have changed over the last 390 months.
repossessions
"And we've seen the number of repossessions increased dramatically. So we know that that's one part of used car availability that seems to be growing is the repossessed used cars,"
Repossession is when the lender takes the car back because the loan is not being paid. More repossessions usually means more people are struggling to make payments.
Repossessions are when lenders take back a vehicle after the borrower defaults or becomes severely delinquent. Rising repossessions typically indicate worsening credit conditions and can temporarily increase the supply of used cars.
repossessed vehicles
"And well, repossessed vehicles tend to be some of the worst quality vehicles that make it back into the used car market. Because if you couldn't afford to make the payment, you couldn't afford to maintain the vehicle."
A repossessed car is one the bank takes back because the owner stopped paying. Since the owner was already struggling with payments, the car may also have been neglected, so it can be in worse shape when sold used.
Repossessed vehicles are cars taken back by the lender after the borrower stops making payments. Because the owner couldn’t afford the loan, these cars often also miss maintenance, which can lead to poorer overall condition when they re-enter the used market.
monthly payment analysis
"So in a second here, I want to do a little bit of a monthly payment analysis. Because again, for those of you that maybe got denied for an auto loan six months ago, 12 months ago, you can probably get approved right now."
A monthly payment analysis is figuring out what you’d pay each month for the loan. The point here is to see if that payment is realistic, not just whether you can get approved.
A monthly payment analysis breaks down what a loan’s monthly cost actually is and whether it fits a buyer’s budget. In this segment, it’s used to evaluate whether the approval being offered is financially sensible given the risk of default.
car loan terms
"We are now offering 250 month loan terms. Stop it soon. As we say, once we got you, we got you."
Loan terms are how long you have to pay back the car loan. A longer term can make the monthly payment smaller, but you usually pay more overall and stay in the loan longer.
Car loan terms are the length and structure of the loan—most importantly the number of months you’ll be paying it back. Longer terms (like 120 months or “250 month” mentioned here) can reduce the monthly payment but increase total interest paid and extend the time you’re exposed to risk.
Dodge Ram
".... I'm playing my swim race. Also had one of those Ram 2500 big horn trucks as my rental. $156 for two d..."
The Dodge Ram is a large pickup truck made for carrying things and towing when needed. A Ram 2500 Big Horn is a higher-trim version of that truck, often used as a rental because it’s roomy and capable. People talk about it because it can be a practical choice for trips where you might need extra space or power.
The Dodge Ram is a full-size pickup truck line known for hauling capability and everyday usability. In the context you shared, the Ram 2500 Big Horn is being discussed as a rental, which highlights how these trucks are often chosen for comfort and practicality when you need more capability than a smaller vehicle. It may come up on a podcast because people compare real-world costs, ride comfort, and how well the truck fits specific tasks or trips.
Ram 2500 big horn
"Also had one of those Ram 2500 big horn trucks as my rental. $156 for two days, $100 less than a compact."
The Ram 2500 is a large, heavy-duty truck, and Big Horn is one of its trim levels. The host uses it as an example of what a rental can cost and how fuel expenses matter.
The Ram 2500 is a heavy-duty pickup from Ram (Stellantis) known for towing and payload capability, and the “Big Horn” is a common trim level. In the episode, it’s mentioned as a rental example to illustrate rental pricing and fuel costs.
Subaru Outback
"I'm also going to pull open this Outback because, wow, I didn't realize Outback's got to $50,000. So actually, we're going to start with the Outback because this price point is actually closer to the average transaction price of a new car… So this is a $51,497 vehicle."
The Subaru Outback is a popular Subaru that’s made for everyday driving and bad weather, usually with all-wheel drive. Here, they’re using its price to show how your monthly payment and total interest change depending on how long your loan is.
The Subaru Outback is a Subaru wagon/crossover built around all-weather practicality, typically with standard all-wheel drive. In this segment, the hosts use the Outback’s $51,497 price to run a loan payment example and show how term length changes total cost.
average transaction price
"So actually, we're going to start with the Outback because this price point is actually closer to the average transaction price of a new car, which is close to $50,000 right now."
Average transaction price means the typical real-world price people pay for a car after deals. It’s used here so the loan example matches what buyers are seeing in the market.
Average transaction price is the typical selling price that cars actually change hands for, after discounts and deal structure—not just the sticker price. The host uses it to justify why the Outback’s $50,000-ish price is a realistic benchmark for loan math.
payment calculator
"Where is it? To the payment calculator. Because on the payment calculator, this is where I want to start to see, okay, if I can get approved…"
A payment calculator estimates what your monthly car payment will be. You plug in things like the price, down payment, interest rate, and how many months you’ll finance it.
A payment calculator is a tool that estimates monthly loan payments based on inputs like vehicle price, down payment, interest rate, and loan term. The host uses it to translate loan terms into what the buyer experiences each month.
estimated taxes and fees
"Okay. 10.68%. Yes. Let's get rid of. Now we'll keep the estimated taxes and fees. Am I putting any money down?"
Taxes and fees are the extra costs on top of the car’s price, like sales tax and other charges. Including them matters because it changes how much you finance and therefore your monthly payment.
Estimated taxes and fees are the additional costs added to a car’s purchase price, such as sales tax and government or dealer charges. Loan calculators include them so the financed amount (and payment) reflects what you’ll actually owe, not just the vehicle price.
Money down
"Am I putting any money down? Well, we know. People are putting some money down. Yeah. So what do you think? Maybe on this $51,000. 10% sounds almost reasonable… We'll keep $5,000 down."
Money down is the cash you pay upfront when buying the car. More money down usually means you borrow less, so your monthly payment and total interest can go down.
Money down is the upfront cash you pay at purchase, reducing the amount financed. Putting more down typically lowers monthly payments and total interest because the loan principal is smaller.
trade
"Okay. So we'll keep $5,000 down. I don't have a trade, so that's good for me."
A trade means you sell your current car to the dealer as part of the deal. That value can reduce how much you have to finance for the next car.
A trade (trade-in) is when you apply the value of your current vehicle toward the purchase of a new one. In loan calculations, a trade-in can effectively reduce the amount you need to finance, similar to a down payment.
60 months
"Well, do 60 months first. I'm going to take some notes. So at 60 months, at 60 months, the payment is $1,083."
“60 months” means you pay the loan back over five years. It can cost more per month than a longer loan, but it often costs less in total interest.
A 60-month auto loan term means repayment over five years. Compared with longer terms, it generally raises the monthly payment but reduces total interest paid.
84 months
"And if you decide because that $851 payment just is a little bit more reasonable for you to spend every month, 84 times 851 equals $71,484, which means that you are paying $7,500 more in interest by going from 60 months to 84 months."
“84 months” means the loan is paid back over seven years. The monthly payment may be lower, but you typically pay a lot more interest over time.
An 84-month auto loan term means repayment over seven years. Extending the term can make the monthly payment feel more manageable, but it usually increases total interest substantially.
Subaru Outback Wilderness
"If you're going out to buy a new car, you will be sticker-shocked beyond belief that a Subaru Outback Wilderness costs $51,497."
The Subaru Outback Wilderness is a more rugged version of the Outback. The hosts mention it to show that even a popular Subaru can get very expensive, which can make car loans feel harder to manage.
The Subaru Outback Wilderness is a higher-trim Outback built for more rugged, off-road-leaning use than a standard Outback. In this segment, it’s used as a real-world example of how today’s new-car pricing can lead to sticker shock and high monthly payments.
sticker-shocked
"This is average in today's market. If you're going out to buy a new car, you will be sticker-shocked beyond belief that a Subaru Outback Wilderness costs $51,497."
“Sticker shock” means you’re surprised by how expensive the car is when you see the price. The point is that the monthly payment can hide the real total cost.
“Sticker shock” is the moment you see the manufacturer’s listed price on the window sticker and realize it’s far higher than you expected. Here, it’s tied to the idea that loan payments can look “affordable” while the total cost is much higher.
loan term length
"payments ranging from anywhere of $1,083 on the loan term length that is most fiscally responsible, 60 months relative to your 72-month note at $950, or your 84-month note at $851"
Loan term length is how long you have to pay off the car loan. A longer loan can make the monthly payment smaller, but you often pay more money overall because of interest.
Loan term length is how many months you’re financing the car—like 60, 72, or 84 months. Longer terms usually lower the monthly payment, but they also increase the total interest you pay over the life of the loan.
riskier approvals
"more and more people are finding themselves approved for lenders doing riskier options... We're seeing banks take on riskier approvals right now than they have in the past decade"
Riskier approvals are when lenders approve loans for people who may be more likely to have trouble paying them back. The concern is that this can lead to deals that cost more over time.
Riskier approvals are lending decisions where banks approve borrowers who are more likely to struggle to repay, often due to weaker credit or less stable finances. The hosts connect this to longer, more expensive loan structures that can trap buyers in higher total costs.
finance office
"when you're sitting in the finance office with the finance manager at the dealership, and the finance manager is showing you the different payments based on different terms"
The finance office is where the dealership handles the paperwork and the loan details. The hosts are saying to be careful because they may focus on the monthly payment instead of the total cost.
The finance office is the dealership area where the deal is finalized and paperwork is handled, including arranging the loan and discussing add-ons. This segment warns listeners about how payment numbers can be manipulated by changing loan terms.
finance manager
"when you're sitting in the finance office with the finance manager at the dealership, and the finance manager is showing you the different payments based on different terms"
The finance manager is the person at the dealership who helps set up your loan and deal paperwork. The hosts are warning that their pitch may make the monthly payment seem easier than the real total cost.
A finance manager is the dealership representative responsible for structuring the financing and presenting options like different loan terms and payment schedules. In this segment, they’re portrayed as the person who may steer you toward a deal that looks affordable but costs more in interest.
Honda Pilot Elite
"I test drove an Outback XT Touring and a Honda Pilot Elite. One was reasonable. $50,000. One was not."
The Honda Pilot Elite is a nicer, higher-end version of the Honda Pilot SUV. They mention it to compare prices and show how some family vehicles can be surprisingly expensive to finance.
The Honda Pilot Elite is a higher trim of the Honda Pilot SUV, positioned as a more expensive, feature-loaded family vehicle. In this segment, it’s used as a comparison point against a Subaru Outback to show how pricing and financing expectations vary by model and trim.
Toyota Sienna
"Let's turn our attention to a Toyota Sienna. That's where I want to go. Okay. Let's give me a second. Actually, we're a forerunner at $64,000. We'll stick with the Sienna."
The Toyota Sienna is a minivan people buy for family use. Here, the point is that even a minivan can cost a lot right now, which makes the monthly loan payment feel huge.
The Toyota Sienna is a minivan known for being a practical family hauler with strong demand in the current market. In this segment, the hosts focus on how expensive the Toyota Sienna can be (around the $63,000 range) and what that means for monthly financing costs.
4Runner Forerunner
".... Okay. Let's give me a second. Actually, we're a forerunner at $64,000. We'll stick with the Sienna. Give me ..."
The 4Runner is a midsize SUV designed to handle tougher roads and light off-road driving. It’s popular with people who want a vehicle that can still be used daily but is also more rugged than a typical city SUV. It may be mentioned in a podcast when comparing options and costs.
The Toyota 4Runner is a midsize SUV built with a reputation for durability and off-road capability. It’s often discussed because it blends everyday comfort with rugged hardware, making it a common choice for people who want one vehicle that can handle both daily driving and rougher terrain. In your excerpt, it appears in a pricing or lineup discussion, which is typical of how podcasts compare SUV options and value.
Carloan Apocalypse
"because again, for those of you that are tuning in late, the Carloan Apocalypse, we actually made a mistake with today's title. Yes, we have access to credit at the highest levels we've seen in the past decade, 10 years."
“Carloan Apocalypse” is a dramatic way of saying car loans are getting harder and more expensive. The hosts argue that more lenders are taking on risk and buyers are getting stuck with higher loan costs.
“Carloan Apocalypse” is the hosts’ framing of a situation where auto lending conditions worsen—borrowers face higher rates and/or lenders take on more risk. They connect it to a “bubble” in auto credit, arguing that more people are being pushed into expensive financing.
36-month note
"60 times $1,371 equals $82,262. Oh my God, $82,260. That was for the 60-month note low."
It means the loan is set up to be paid back over 5 years. Your monthly payment is calculated based on how much you’re borrowing and the interest cost.
A “60-month note” is an auto loan structured to be repaid over 60 months (5 years). The monthly payment depends on the loan amount, the interest rate, and any dealer fees or markups that affect the financed total.
72 times $1,198
"Yeah, I'm afraid so. 72 times $1,198, just a mere $2,256. My guess is that $84 times $1,077."
They’re calculating a longer loan: 72 monthly payments. Even if the payment looks smaller, you often end up paying more money overall because you’re paying interest for longer.
This is the math for a longer loan term: 72 monthly payments at $1,198 each. Extending the term can lower the monthly payment, but it usually increases total interest paid over the life of the loan.
dealer is actually charging a $1,700 markup
"It's a $63,198 vehicle. Yeah. That's the MSRP. The dealer is actually charging a $1,700 markup."
A markup is extra money the dealer adds on top of the sticker price. If you finance that higher price, you borrow more and pay more interest.
A dealer markup is an added amount above the vehicle’s baseline price (often MSRP) that increases the selling price. In auto financing, a higher selling price can raise the loan principal and therefore the total interest paid.
MSRP
"It's a $63,198 vehicle. Yeah. That's the MSRP. The dealer is actually charging a $1,700 markup."
MSRP (Manufacturer’s Suggested Retail Price) is the sticker price the automaker recommends for a vehicle before discounts. In the segment, MSRP is used as the baseline to compare against what the dealer is charging.
loan amounts
"this changes the principle of the loan amount. Oh, yeah, no, absolutely. But at this point,"
The loan amount is the total price you’re borrowing to pay for the car. If that number goes up, your payments and total cost usually go up too.
The loan amount is the principal you finance—what the lender actually lends you. Changes to the loan amount (for example, from dealer markups or fees) directly affect monthly payments and total interest.
car loan payments in excess of $1,000 a month
"I mean, and we know the percentage of people that have car loan payments in excess of $1,000 a month is, I believe it's like 21% of all car loans."
They’re talking about people whose monthly car payment is more than $1,000. The point is that a lot of borrowers are carrying very large monthly costs.
This refers to a threshold for affordability: borrowers whose monthly car payment exceeds $1,000. The segment uses it to argue that a meaningful share of borrowers are taking on very high monthly obligations.
Request an Explanation
Heard something you'd like explained? We'll add it to this episode.
Sign in to request explanations for terms you heard.
Want to learn more?
Browse our glossary for plain-English explanations of automotive terms, jargon, and concepts.
Help improve this episode
See something that's not quite right? Our annotations are AI-generated and can sometimes miss the mark. Click the flag icon on any annotation to suggest a correction.