University of California Institute of Transportation Studies

Automobiles can greatly enhance access to employment and other opportunities. However, many households do not have the resources to purchase a vehicle outright and must rely on automobile loans. This increases the total cost of owning a vehicle, particularly for non-white consumers who may have to pay higher purchase prices and/or higher interest rates due to discriminatory lending practices. The effects of high household debt—of which automobile loans are one component—are magnified in lower income neighborhoods, leaving residents with fewer resources to invest in the local economy. Our team used the University of California Consumer Credit Panel, a dataset from Experian, which tracks every loan and borrower in California, to examine how and why automobile loan debt varies from place to place in the state and its consequences. We specifically tested whether total automobile debt, debt burden (the ratio of automobile debt to income), and automobile loan delinquencies in 2021 disproportionately affected non-white neighborhoods.