People in Mississippi Can’t Pay for Their Cars

In Mississippi, the struggle to pay for car loans is more pronounced than anywhere else in the U.S. as nearly seven out of every 100 car owners in the state are grappling with auto loan payments overdue by more than 90 days.

The trend puts Mississippi at the top of the nation for the highest percentage of delinquent auto debt at 6.77 percent, an indicator of the broader economic challenges faced by its population.

The findings, detailed by the Thompson Consumer Law Group through an analysis of Federal Reserve Bank of New York data, revealed that the problem has worsened over the past year.

From the last quarter of 2022 to the end of 2023, Mississippi’s rate of auto loan balances overdue by more than 90 days surged from 6.1 percent to the current 6.77 percent, a growth that outpaces the national average increase.

Nationally, the rate of auto loan balances more than 90 days delinquent rose to 4.2 percent at the end of 2023, according to the New York Fed, up from 3.81 percent the previous year, which is still markedly behind Mississippi.

At the 90-day mark, “that is usually when lenders start to attempt to repossess a vehicle,” Russell S. Thompson, managing partner at Thompson Consumer Law Group, shared with Newsweek. “So an increase of auto loan balances with more than 90 days delinquency will likely mean more repossessions.”

Rising delinquency rates and the expected increase in repossessions is occurring at a time when, in Mississippi, economic challenges are already pronounced. The state’s population is more vulnerable, as the median annual salary is $52,985, which is the lowest in the country.

It is also grappling with the highest poverty rate in the nation at 18.7 percent, according to data from Wise Voter.

Adding to the economic pressures, high interest rates set by the Fed to combat inflation have exacerbated the financial strain on car owners. Since March 2022, the Fed has increased rates 11 times, leading to the highest car loan rates since 2008, making it increasingly difficult for people to keep up with auto loan payments.

While Mississippi leads the nation in auto loan delinquencies, it is far from an isolated case.

“Auto loan delinquency is still rising across America, with every state showing some increase in delinquency in 2023,” Thompson said.

Alabama comes in behind Mississippi with 6.05 percent of auto loan balances overdue by more than 90 days as of the fourth quarter of 2023—44 percent above the national average. Georgia follows closely with a delinquency rate of 5.71 percent, placing it third nationally.

Delaware and Michigan also saw notable increases, with Delaware experiencing one of the largest percentage-point increases in the U.S. From the period tracked, Delaware’s rate of delinquency rose to 5.2 percent, moving it to eighth in the national ranking. Michigan reported a delinquency rate of 5.24 percent.

On the other end of the spectrum, Utah, Alaska and New Hampshire had the lowest 90-day delinquency rates at 1.89 percent, 2.09 percent and 2.1 percent, respectively.