Auto loan debt reaches $1.52 trillion Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering you interactive tools and financial calculators as well as publishing quality and impartial content. This allows users to conduct research and compare information at no cost to help you make sound financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site come from companies that pay us. This compensation may impact how and where products are displayed on this website, for example, for example, the order in which they may appear in the listing categories, except where prohibited by law. Our loan products, such as mortgages and home equity, and other home lending products. But this compensation does affect the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial offers that may be available to you. Jackal Pan/Getty Images
3 minutes read. Published on December 19, 2022.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of borrowing money to buy an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to take control of their finances through providing concise, well-researched and well-written information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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You have money questions. Bankrate has answers. Our experts have been helping you manage your money for over four years. We continually strive to provide consumers with the expert advice and tools required to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and precise. Our award-winning editors and reporters provide honest and trustworthy information to assist you in making the right financial decisions. The content we create by our editorial staff is objective, factual and uninfluenced by our advertisers. We’re transparent about the ways we’re in a position to provide quality content, competitive rates, and useful tools for our customers by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and services or by you clicking on certain hyperlinks on our site. Therefore, this compensation may influence the manner, place and in what order items are listed, except where prohibited by law. We also offer mortgage, home equity and other home lending products. Other factors, like our own proprietary website rules and whether a product is available in your region or within your personal credit score could also affect how and where products appear on this site. While we strive to provide an array of offers, Bankrate does not include details about each financial or credit item or service. In the third quarter in 2022, we brought an exploration of what is known as the “new normal” after the pandemic, anxiety about the threat of a new outbreak, and a rise in household debt. Particularly, automobile loan debt climbed to $1.52 billion. This makes up for more than 9 percent of the household debt. In addition, it has increased to near pre-pandemic levels as per the third quarter report, 60-day delinquencies for new car loans in the range of 0.48 percent and used car loans with 1.17 percent. An unfortunate mixture of factors have led to this rise on auto loan debt. One of them is supply chain issues leaving the market with record prices for cars. Another is the general risk for those who borrow. This is particularly true for those with the highest risk of being in debt or failing to make the payment. Statistics on delinquency and debt loan balances increased 7.6 percent in the third quarter of 2022. The total across the United States total is $5,210. Since the beginning of 2022 the rate has increased the rate has increased by 1.77 percent for a 60 month new vehicle loan or 1.78 percentage points to get a 48-month used car loan. Loans that are 30 days delinquent were increased by 2.19 percent in the third quarter of 2022 compared with 1.66 percentage in 2021. A loan that is 60 days past due have increased up to 0.81 percent in the third quarter of 2022 compared the 0.55 per cent in 2021. Men have 16.3 percent more than women. Total automobile loan and lease value was 1.43 trillion by 2021 compared the 1.6 trillion for student loans.
A scarcity of vehicles has driven prices up. One reason for the growth in auto loan debt over the recent years is the lack of cars available, explains Bankrate’s chief financial analyst Greg McBride, CFA. “The shortage of new cars created a scarcity that pushed prices higher, and this was reflected in used cars as more car buyers moved towards this trend,” McBride says. As this trend has been building, “there was an explosion in the amount of money paid and loan balances financed once the pandemic struck.” McBride furthers this argument by saying that there is no better location to observe families living paycheck-to-paycheck than in their driveways. Drivers have been met with pricey vehicles due to supply chain issues which resulted in budget-busting payments. How the economy affects debt The state of the economy directly impacts the ability to finance, purchase and pay off new or used cars with regard to cost and available interest rates. With 43 percent of economists predicting that recession will continue to grow in the next 12 to 18 months, is just one cost that will be more. Even if drivers are able afford to purchase a car upfront however, the high interest rates make the possibility of delinquency and debt a reality for a lot of people who borrow. Simply, as the economy grapples with steep inflation rates and rising interest rates, the government has been trying to stop the problem by raising the benchmark rate. The benchmark rate is set to 4.25-4.5 percent in December. This rate determines the amount banks can charge to lend cash to different banks. This will affect the interest rates of consumer products, like car loans. While relief did come in the form of vehicle price reductions, higher rates may increase the number of people falling behind on payments and in debt. There is a challenging dichotomy between less expensive vehicles . But as optimistically shared in the article, serious auto loan late fees are predicted to decrease modestly to 1.9 percent in 2023 , down from 1.95 per cent in 2022. The average cost for drivers was the equivalent of $750 a month for a brand new car, as well as $525 monthly in the 3rd quarter in 2022. The index of consumer prices was at 298.1 in mid-December, an increase from 278.9 a year ago. The average term for subprime borrowers financing new cars was 74.25 in the third quarter of 2022. Average interest rate for new cars during the 3rd quarter in 2022 was 5.16 percent and 9.34 percent for used. There’s the risk of 65 percent of a recession before the middle of 2024, according to a .
How to escape the debt. While debt that has been incurred may appear impossible, there’s still steps you can take to get out of the gap that late or missed payments have caused. Americans were in debt on average of $96,371 by 2021therefore if you’ve experienced a debt crisis there’s no reason to feel alone. Use these suggestions to help you remove yourself from the burden of debt. Look into debt consolidation. A credit consolidation loan is a form of your debt. It can help you lower your interest costs and assist to pay off your debt faster. To find the best debt consolidation loan you can look through a variety of offers. Like with every loan one should seek preapproval before you can lock in the lowest rate you can get. Reassess your budget If you’re owing more than what’s to pay in your bank account it might be an ideal time to . To adjust the amount you spend begin by taking a look at how much you spend and what are you spending your cash on. Look for common-cost items you could eliminate or cut down. Any additional cash that shows up could be used to repay your debt. Make a request for loan modification if you’re at risk of falling behind on your auto loan It is a means to alter your current loan to fit your financial needs. Different from , this process involves your present lender and will alter the loan conditions. Keep in mind that not every lender is willing to change the terms of a loan, and you may have to prove your financial hardship.
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ways and pitfalls of borrowing money to purchase a car. The article was edited 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 control their finances through providing concise, well-researched and well-researched content that breaks down otherwise complicated topics into digestible pieces.
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