For many Americans, owning a car is essential for commuting to work, accessing education, caring for family members, and participating in daily life. Yet purchasing a vehicle has become increasingly expensive and defined by long-standing industry practices that harm consumers. By 2025, the average price for a new car approached $50,000, while used cars averaged over $25,000. While economic pressures during the pandemic pushed prices higher, long-standing structural issues within the auto sales and financing marketplace have also driven up costs for consumers. Many of the troubling practices CRL identified in the 2010s — price discrimination, interest rate markups, add-on product financing, weak underwriting, and rising repossessions — still harm consumers today.
Dealers and lenders have long engaged in predatory practices that extract money from consumers, through tactics that are difficult for consumers to detect or avoid. During the sales process, lenders may engage in high-pressure tactics, misleading claims about vehicle features or conditions, and aggressive upselling of overpriced add-ons and services. These practices often obscure the true cost of the vehicle and limit consumers' ability to make informed decisions. Beyond the sale, financing exposes consumers to interest rate markups, hidden fees, and unaffordable loan terms.
High prices and predatory practices have pushed millions of buyers into longer and more burdensome auto loans. Outstanding auto loan debt reached $1.67 trillion in 2025, making it the second largest household debt after mortgages. As loan balances and terms grow, borrowers are increasingly falling behind: delinquencies, defaults, and repossessions have reached the highest levels since the Great Recession. Subprime borrowers, who are more likely to face higher interest rates and predatory practices, are particularly vulnerable. In 2025, subprime borrowers paid roughly double the interest rate of prime borrowers for both new and used vehicles, with an average APR of 20%. When borrowers fall behind, repossession can happen quickly and the subsequent loss of transportation often triggers further financial instability, including job loss and reduced income.
This paper examines the predatory harm lower-income borrowers with subprime credit scores face when purchasing and financing a car. Drawing on a series of focus groups and in-depth interviews, it documents borrowers’ firsthand experiences with the tactics dealers and lenders use, the challenges of managing an unaffordable loan, and the consequences of repossession. What borrowers shared aligns with a substantial body of existing research documenting the predatory nature of auto sales and the auto lending marketplace. Borrowers’ experiences reinforce what other studies have previously shown and underscore the need for regulatory reforms that address these systemic harms.
Key Experiences from Our Focus Groups Include
- “They can be a little shady” — Dealers used high-pressure tactics to increase costs and steer borrowers into costly loans. All participants described feeling pressured by dealers in some way to make a purchase. Most borrowers took out costly loans they didn’t fully understand.
- “I had no choice” — Borrowers were offered limited loan options and felt compelled to accept loans with unaffordable terms. Most participants were told they only qualified for one loan, which they felt compelled to accept, given their financial situation and need for transportation. They also described dealers that withheld critical information or misrepresented the value of add-on products and warranties.
- “I’m kind of in a bind” — Borrowers struggled to repay unaffordable loans. Borrowers described hardship even from the outset of the loan, coping mechanisms like getting a side job to repay unaffordable loans, and surprise fees like deferred interest charges.
- “We woke up to them taking our car” — Borrowers described aggressive repossessions and “kill switches.” Many focus group participants described the hardship of the repossession process and how it negatively impacted their lives.