Auto loan debt reaches $1.52 trillion Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering you interactive tools and financial calculators, publishing original and objective content, by enabling users to conduct research and compare data for free – so that you can make informed financial decisions. Bankrate has partnerships with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on the site, such as such things as the sequence in which they appear in the listing categories in the event that they are not permitted by law. Our loan products, such as mortgages and home equity, and other home lending products. However, this compensation will affect the content we publish or the reviews you see on this site. We do not include the entire universe of businesses or financial deals that might be available to you. Jackal Pan/Getty Images
3 min read . Published December 19, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers to navigate the ways and pitfalls of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have been helping you master your money for over four years. We continually strive to give our customers the right advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to strict standards , so you can trust that our content is truthful and accurate. Our award-winning editors and reporters produce honest and reliable information to assist you in making the right financial decisions. Our content produced by our editorial staff is objective, factual and is not influenced from our advertising. We’re honest regarding how we’re in a position to provide quality content, competitive rates, and useful tools to you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and services or when you click on certain links posted on our site. This compensation could impact how, where and in what order items appear within listing categories in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other factors, such as our own proprietary website rules and whether or not a product is available within the area you reside in or is within your own personal credit score may also influence how and where products appear on this website. While we strive to provide a wide range offers, Bankrate does not include the details of every financial or credit product or service. Third quarter 2022 was an ongoing investigation of”the “new normal” after the pandemic, worry about the imminent threat and the increase in household debt. The most notable is that auto loan debt climbed to $1.52 billion. That accounts for more than 9 percent of the household debt. In addition, it has increased up to levels close to pre-pandemic, in the third quarter of the report, 60-day delinquencies for new automobile loans sitting at 0.48 percent, and used car loans at 1.17 percent. A plethora of unlucky factors have led to this rise on the amount of auto loan debt. One reason is the supply chain issues that have led to record-high prices for vehicles. Second are across the board for borrowers. This is particularly relevant for those the highest risk of being in debt or failing to make a payment. Statistics on delinquency and debt loan balances increased 7.6 percent during the third quarter of 2022. The across the country is $5,210. Since the beginning of 2022 the rate has increased by 1.77 percentage point for a 60-month brand new vehicle loan and 1.78 percentage points to get a used 48-month car loan. Loans that are 30 days past due were increased up to 2.19 per cent in 2022’s third quarter compared the 1.66 percentage in 2021. A loan that is 60 days delinquent have increased to 0.81 percent in the third quarter of 2022 as compared to 0.55 per cent in 2021. Men are able to get 16.3 percent than women. Total car loan and lease total was 1.43 trillion by 2021 compared the 1.6 trillion for student loans.
The scarcity of cars has led to higher prices. One cause of the increase in auto loan debt over the last few times has been the fewer vehicles available, explains Bankrate’s Chief Financial Analyst Greg McBride, CFA. “The shortage of new cars caused a shortage that drove prices higher, and this led to the sale of used cars when more car buyers shifted in that the direction of buying,” McBride says. As this trend has been building, “there was an explosion in prices paid and loan balances that were financed after the pandemic hit.” McBride furthers this point by explaining that there’s no better spot to see families living paycheck-to-paycheck than in the driveway. Drivers have been met with the cost of vehicles to be a result of supply chain issues which resulted in high-cost payments that are a burden on the budget. How the economy affects debt The state of the economy directly impacts the capacity to buy, finance and repay used or new cars in terms of costs and interest rates available. With the majority of economic experts predicting that recession is likely to grow in the next 12-18 months, it’s just one of the expenses that will cost more. Even if drivers are able to finance a vehicle upfront however, the high interest rates make the possibility of delinquency and debt a truth for many borrowers. Simplyput, as the country is struggling with high inflation rates, the has been working to quell the issue by increasing the rate of reference. The benchmark rate was increased to 4.25-4.5 percent for December. This rate determines the amount banks are able to charge for lending funds to banks that do not have a bank, which can affect interest rates for consumer goods, such as car loans. Even as relief came with the help of car prices declining, high rates can increase the amount of people falling behind on repayments and slipping into debt. There’s a tense distinction between vehicles that are less expensive . However, as is shared optimistically in the article, serious automobile loan late fees are predicted to moderately decrease to 1.9 percent by 2023, from 1.95 percent in 2022. Averagely, drivers pay the equivalent of $750 per month to purchase a brand-new car and $525 per month in the third quarter of 2022. The index of consumer prices was at 298.1 in mid-December, an increase from 278.9 last year. The average loan term for subprime lenders who finance new cars is 74.25 for the quarter ending March 31, 2022. The average interest rate for brand new cars in the third quarter of 2022 was 5.16 percent, and 9.34 percent for used vehicles. There’s a 65 percent risk of a recession in the mid-2024 timeframe, according to a .
How to exit the debt. While debt that has been incurred may appear impossible, there’s still ways to escape the hole that missed or late payments have created. Americans had an average balance of $96,371 as of 2021therefore if you’ve been in deep debt, you aren’t alone. Take note of these tips to help you overcome the burden of debt. Think about debt consolidation. An debt consolidation loan is a form of your debt. With it, you can save on interest and help to pay off debt at a faster rate. To find the best debt consolidation loan there are a few options. As with any loan, apply for preapproval in order to secure the best rate possible. Review your budget if you have more debt than what you have on your bank account it might be a good time to . To alter your spending, start by taking the time to look at what you spend and what you’re spending it on. Look for common-cost items that you can eliminate or reduce. Any additional cash that shows up could be used to repay your credit card. Request loan modification if you’re in danger of being late with your vehicle loan, is a way to alter the terms of your current loan to suit your financial situation. This process is different from the other one. It is done with your existing lender and will change your loan conditions. Be aware that not every lender will be willing to modify an loan and you may have to prove your hardship.
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to take control of their finances by providing precise, well-studied information that breaks down otherwise complicated subjects into bite-sized pieces.
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