I haven’t met many people who were actually able to afford a new car.
Sure, plenty buy them, but suffocating monthly loan payments mean the “affording” part isn’t exactly met.
For decades, we shrugged off the warning that a new car loses 10% of its value the second it leaves the lot. The counter-argument was simple: You paid for peace of mind and the guarantee you wouldn’t end up stranded on the road.
But today, even buying a used car is a crushing mathematical problem.
According to Edmunds, the average monthly new-car payment has hit a record $777, and 20.3% of buyers pay $1,000 or more monthly. To cope, many stretch loans over six or seven years. Edmunds’ Ivan Drury calls this a “mathematical trap,” warning that pairing a 7.0% APR with an 84-month loan means handing over nearly $10,000 in interest alone, leaving buyers “highly vulnerable to falling underwater.”
Used-car buyers are squeezed just as hard, financing an average of $30,414 at 10.5% interest. For subprime buyers, Experian data show interest rates averaging a staggering 19.4% to 21.7%.
That pressure isn’t just hurting buyers. It is also hitting the dealerships that specialize in financing customers with weaker credit. Now, one of the largest chains in the country has dramatically reduced its footprint.
America’s Car-Mart closes 40% of its retail footprint
A major automotive retailer that operates a chain of used-car dealerships, America’s Car-Mart reported on July 14, 2026, its fourth-quarter and full-year results for the period ended April 30, 2026.
The car dealer, which specializes in the “buy here, pay here” (integrated auto sales and financing) market, reported total revenue of $1.281 billion, down by 7.9% from fiscal 2025.
America’s Car-Mart full fiscal 2026 earnings vs. fiscal 2025:
Gross profit per unit improved 1.0% to $7,442.
Gross margin percentage of 35.4% versus 36.7%.
Net loss amounted to $139.11 million, versus net income of $17.93 million.
Net loss per share was $16.79, compared to earnings per share of $2.38. Source: America’s Car-Mart official press release
In the report, America’s Car-Mart confirmed it has consolidated 60 dealership locations in the period of 12 months (from April 30, 2025, to April 30, 2026). The company’s active dealership count decreased from 154 to 94, resulting in a 40% footprint reduction.
America’s Car-Mart closes 40% of its fiscal footprint. Cheng Xin / Getty Images
Why has America’s Car-Mart been closing so many locations?
America’s Car-Mart began showing the first signs of trouble more than a year ago. After digging through its official reports, I found that in December 2024, the company’s official Q2 FY25 Management Script said it had closed a $300 million term loan that removed the capital-related limits to optimize its store footprint and organization structure.
“Now with more flexibility, we’re moving decisively on a multi-phase plan to optimize our footprint, cost structure, and strengthen capital efficiency,” stated America’s Car-Mart CEO Doug Campbell.
Campbell added that phase one was executed in early November by consolidating five underperforming stores and eliminating approximately 10% of its employees. The second phase was set for Q3 and was projected to result in more than $20 million in annualized SG&A savings.
On Jan. 13, America’s Car-Mart confirmed in a press release it has completed phase 2 by consolidating 13 of its locations into higher-performing nearby dealerships. Combined with phase 1, that makes 18 consolidated locations in those two phases.
America’s Car-Mart 16 consolidated locations:
As of the July 14 earnings release, the company has not yet disclosed the locations of the remaining 42 dealership locations that were consolidated in the fourth quarter of fiscal 2026.
“Faced with limited origination capital and no revolving warehouse facility, we intentionally reduced originations and inventory to protect liquidity and avoided originating loans we lack the capacity to carry,” Campbell said during the Q4 and full fiscal 2026 year earnings call.
While retailers frequently close underperforming stores to improve profitability, the situation of America’s Car-Mart appears to go beyond routine cost-cutting.
As part of my recent retail tracking coverage for TheStreet, I’ve documented how several major mall staples are executing similar strategies to protect their profit margins. Fossil Groupshuttered seven stores during the first quarter of 2026 alone, and Vera Bradleyclosed 13 underperforming retail locations.
Another example is fashion mall retailer Tilly’s, which successfully cut its rent and operating costs by closing 40 underperforming locations and opening 12 new ones over two years.
This optimization boosted quarterly gross profits to $36.1 million and dramatically shrank the company’s net losses. It recently confirmed plans to open three new stores later this year.
However, mall fashion retailers are a completely different type of business than a “buy here, pay here” car dealership, and the management views liquidity, not merely store efficiency, as the primary challenge.
In fact, Campbell confirmed in a call that there will be “going concern disclosure in our Form 10-K. It’s there because we have not secured additional financing or an alternative transaction that we need to resolve our liquidity constraint, not because anything changed in how our customers are paying us back.”
What is a “going concern”?
The going concern principle assumes that an organization or business is financially stable enough to continue to operate for the foreseeable future, typically the next 12 months.
A going concern disclosure does not mean a company will file for bankruptcy. It indicates that management has identified conditions that raise substantial doubt about the company’s ability to continue operating over the next year.
Related: After closing 250 restaurants, pizza chain drops nostalgic offering
If those conditions cannot be resolved, possible outcomes can include refinancing, restructuring, asset sales, or, in some cases, seeking bankruptcy protection, according to Corporate Finance Institute.
In the case of America’s Car-Mart, the company specifically identified the “potential need to seek protection under applicable bankruptcy or insolvency laws” as one of the risks it faces if it cannot secure additional financing or complete a strategic transaction.
America’s Car-Mart also stated in its Form 10-K that it is facing severe liquidity, debt, and funding challenges that threaten its survival over the next year. Management’s current restructuring efforts have not yet been enough to clear these doubts.
“In accordance with ASC 205-40, the Company’s substantial indebtedness, its liquidity position, and the uncertainties associated with satisfying the milestones under the amendment to its Credit and Guaranty Agreement and securing additional financing raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are issued.”
What does a downsized America’s Car-Mart mean for drivers?
For millions of working-class Americans, keeping a reliable car on the road isn’t a luxury; it is a lifeline that gets them to work. In many communities, especially rural ones, “buy here, pay here” dealerships are one of the few financing options available to borrowers with poor or limited credit histories.
Earlier this year, Sen. Elizabeth Warren (D-Mass.) launched an investigation into the “buy here, pay here” (BHPH) industry, specifically targeting companies like America’s Car-Mart over concerns that the combination of high interest rates and aggressive repossession practices can be predatory for financially vulnerable drivers.
“The Fed found that nearly 78% of BHPH [buy here, pay here] lending volume goes to subprime borrowers, compared to just 27% for traditional auto lenders. The research highlights that while BHPH loans have delinquency and default rates approximately 2.65 and 1.88 times higher than those of traditional auto lenders, they are 16.63 times more likely to be in active repossession status,” according to SWLAW.
“Car repossession is a devastating disruption to someone’s life — and it is inexcusable when that repossession is in error,” wrote Warren.
Moreover, data from Symend reveal that “nearly 1 in 6 subprime auto borrowers was at least 30 days late. That’s not a collections problem. That’s an affordability crisis wearing collections clothes.”
For now, America’s Car-Mart says its optimization is aimed at preserving liquidity rather than responding to weaker customer payment performance. Existing borrowers will continue making payments under the same loan terms, even if their local dealership has been consolidated, because loan servicing is transferred to another location.
But the company’s situation underscores a much broader problem. As financing becomes increasingly expensive for both consumers and lenders, the dealerships that serve higher-risk borrowers are coming under growing pressure.
For many working-class Americans, the question is no longer whether they can afford a new car, but whether they can afford to stay on the road at all.
