My youngest son Cooper recently passed the written exam and now only needs to demonstrate sufficient on-road skills to officially become a licensed driver. Fortunately for all of us, the state mandates a minimum six-month waiting period to properly acquire said skills.

With three boys, I’ve done this twice before. Still, it never gets any easier. From a parent’s perspective, I’m not sure what’s harder – the emotional strain or the financial drain.

The average price for a new vehicle currently stands at about $48,000, versus $37,000 before the pandemic. I’m not about to spend that much on a 16-year-old, so a shiny new car or truck is off the table. But pre-owned vehicles aren’t much more affordable and currently average just north of $26,000.

Of course, that’s only the beginning. We live 20 miles from anywhere, so I can already envision the odometer spinning – multiplied by $2.79 per gallon. There’s also the inevitable maintenance and service costs: new tires, regular oil changes, and hopefully no serious repairs.

This also means making a call to my insurance guy to add another driver to our policy. If you are paying auto insurance for a teenager, then you know this is where the real sticker shock comes. And insurance rates have spiked another 20% over the past year, three times the 6% increase in maintenance cost.

According to AAA, the average monthly expense to own and operate a vehicle has risen from $773 in 2019 to $1,015 today. Incidentally, that’s about what I paid for my first house note.

But that’s not the scary number I was referring to above.

For many families, car notes are the second biggest household expense each month after rent/mortgage. To avoid late fees and credit score dings, these payments are a top priority. In other words, they get taken care of before most other obligations. So a sharp uptick in delinquency rates would be a real harbinger of middle-class financial woes.

Well, it’s here.

According to Fitch, nearly 7% of borrowers with less-than-perfect credit are now running 60 days or more behind on their car notes. That doesn’t sound too bad – it means 93% are on time. But in historical terms, this is the highest delinquency rate in at least 30 years – possibly more, since recordkeeping didn’t begin until 1994.

Cue the alarm bells.

There are signs of pressure in the upper tier of the credit spectrum as well, although not as dire. But among all borrowers, the New York Fed finds that serious delinquency rates (90 days or more) are now at the highest levels in 15 years.

Americans owe $1.66 trillion on their vehicles, an increase of $11 billion last quarter and $48 billion last year. For perspective, outstanding credit card balances have risen to $1.21 trillion.

If you include student loans, mortgages and other lines, total household debt increased by $533 billion last year and now stands at $18.0 trillion – a new record high. Credit cards accounted for about half of the total increase last quarter, giving credence to anecdotal reports that some families are using plastic to cover at least a portion of their basic necessities.

Others have tapped into home equity lines of credit (HELOC), with $36 billion in new originations last year. As in every other category, payment delinquency rates are higher than pre-pandemic levels.

Let’s tap the brakes here. There is a big difference between making payments a few weeks late and defaulting on a loan. I’ll be keeping an eye on those figures as well. But U.S. borrowers have shown incredible resilience at almost every turn.

More importantly, this kind of raw data doesn’t mean too much in isolation and needs a frame of reference. Yes, $18 trillion in household debt is a record high. But it’s only 61.7% of GDP – trending down from 65% in 2022 and a peak of 85% during the 2008 recession.

For perspective, Canada has a household debt/GDP ratio of 99.2%.

The bigger the economy, the more debt (public and private) we can bear.

Still, these elevated delinquency rates shouldn’t be dismissed out of hand – they could be the proverbial canary in the coal mine.

Consumer spending is the growth driver of the U.S. economy. It accounts for somewhere between two-thirds and three-fourths of GDP (70% at last count). And if families are having trouble keeping up with payments on the Visa and the family SUV, then discretionary spending might be reined in — and in some cases, out of the question.

That doesn’t bode well for entertainment or travel or other industries that depend on loose spending. But on the flip side, this cash crunch could be a tailwind for a financial service firm like OneMain Holdings (NYSE: OMF).

It primarily caters to non-prime borrowers, a group with limited access to traditional lenders. Many have been denied credit by banks and credit unions. Through a nationwide network of 1,300 locations, the company provides an array of different loans to these overlooked borrowers, ultimately helping many improve their credit profile.

The average borrower may not have the strongest FICO score (630 on average) but has held down the same job for at least five years and brings home $65,000 in annual income.

OneMain originates about $3 to $4 billion annually, maintaining better credit quality and lower bad debt charge-offs than its peers. It currently works with 2.8 million customers. The community-minded organization also provides credit education to thousands of high schools, as well as free bill negotiation, subscription cancellation and household budgeting tools.

Not surprisingly, it sees the auto loan market as a ripe new distribution channel. With a favorable operating environment, OneMain has trounced the S&P 500 over the past five years, while dispensing more than $25 per share in cumulative dividends.

And the pool of subprime borrowers isn’t getting any shallower.