Putting Automobile Debt on the Map: Race and the Geography of Automobile Debt in California

Most U.S. metropolitan areas developed alongside the automobile, producing neighborhoods of relatively low density. Consequently, access to opportunities in these neighborhoods is predicated on having an automobile, yet many households do not have the resources to purchase one outright, relying on automobile loans to spread out the purchase price. While automobile loans can enable automobile ownership, they also significantly increase the vehicle purchase price, particularly for non-white consumers subject to discriminatory lending practices. In this study, we rely on data from the University of California Consumer Credit Panel from Experian to examine the determinants and geography of automobile debt and its consequences in California, testing whether various automobile debt measures disproportionately affect non-white neighborhoods. We find that, controlling for other factors associated with automobile lending including income, Black and Latino/a neighborhoods have higher total automobile debt, debt burdens (debt relative to income), and automobile loan delinquency rates. In particular, Latino/a neighborhoods shoulder significant automobile debt, while borrowers in Black neighborhoods have the highest delinquency rates. Factors associated with lower total automobile debt and automobile debt burden include better credit ratings, higher residential densities, urban locations, and proximity to rail stations. The findings underscore the importance of policies to offset the costs of automobile ownership and access. As part of this, policymakers should adopt and enforce fair lending rules to combat discriminatory and predatory practices and facilitate access to high-quality financial institutions and products in communities of color.