Americans are drowning in auto loan debt. Why now could be the best time to refinance

U.S. consumers owe a record $1.66 trillion in auto loan debt, according to the Consumer Federation of America, making it the largest category of consumer debt after mortgages

But six months may be too long for borrowers at risk of defaulting or going upside down on their loan.

Levi, who speaks regularly with dealers about sales activity, said he has noticed a “lending squeeze” over the past six months.

“Refinancing can be tough if you owe a lot more than it’s worth,” he said, a situation known as an upside-down or underwater car loan.

Refinancing restarts that cycle, often making it a less cost-effective choice if you don’t have a large balance remaining.

At CNBC Select, we work with experts who have specialized knowledge and authority, grounded in relevant training and experience. For this story, we interviewed Yossi Levi, founder of Car Dealership Guy.

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