Millions of Americans are behind on car payments

NEW YORK (FOX 5 NY) - It could be the next financial time bomb to ripple through the economy. More than 7 million U.S. residents are behind in their auto loan or lease payments by 90 days or more, according to the Federal Reserve Bank of New York.

Auto debt is over $1 trillion in the United States.

Part of the problem is that Americans are now borrowing $5,000 more per car on average than they were a decade ago, LendingTree.com says. Consider it a cost of driving increase.

"The cars now have so much technology embedded in them that it's increasing the cost of cars a little bit, but it makes the car a much better experience," Tendayi Kapfidze, the chief economist at LendingTree says.

But could that better driving experience be setting us up for our next financial crisis?

"The percentage of people who are late is well below where it was during the financial crisis," Kapfidze says.  "What has happened is there's a lot more people who are getting loans so then the number of people late is up."

Kapfidze says it is a good thing that more people are getting loans because that means more people have access to credit.

While auto loan delinquencies don't look like a major risk to the economy, they're definitely a sign of the biggest weak spot in our recent economic boom: disappointing wage growth.

"Certainly because we haven't had the types of wage growth increases that people would like to see, it means that some people can fall into some stress if they overextend themselves in terms of the obligations that they commit to," Kapfidze says.

He says the important thing is that when someone is getting a loan, whether for a house or a car, to make sure it fits well into their personal budget so they don't stretch themselves too thin financially.

Tariffs on the steel industry could continue to drive car prices up, leading to bigger car loans and more defaults.