University of California Institute of Transportation Studies

Most car buyers use some form of financing to purchase a vehicle, and almost half of all California borrowers carry some amount of automobile debt. While automobile loans enable lower-income households—who might otherwise be priced out of vehicle ownership—to make payments over time, this debt can significantly strain household budgets. The COVID-19 pandemic elevated the importance of owning a private vehicle as concerns over viral person-to-person transmission made traveling by car an even more attractive compared to communal transportation (e.g., public transit). Moreover, a host of pandemic-related services, including testing and vaccination, were either only or best accessible by car.

To better understand how COVID-19 impacted car ownership, we explored whether automobile loans (and in turn debt) in California—particularly in communities of color where workers were more likely to work outside of the home—increased during the pandemic. We drew on a one-percent sample of the University of California Consumer Credit Panel, a dataset from Experian of every loan and borrower in California.