Abstract
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.
