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 smarter financial decisions by providing you with interactive financial calculators and tools that provide original and objective content. We also allow users to conduct research and compare data for free to help you make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this website are provided by companies that pay us. This compensation may impact how and where products are displayed on the site, such as such things as the sequence in which they appear within the listing categories, except where prohibited by law. Our mortgage, home equity, and other home lending products. But this compensation does not influence the information we publish, or the reviews that appear on this website. We do not contain the universe of companies or financial offers that may be available to you. Jackal Pan/Getty Images
3 minutes read. Published 19 December 2022
Written by Rebecca Betterton 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 taking out loans to buy an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to control their finances by providing clear, well-researched information that breaks down complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate has answers. Our experts have helped you understand your money for over four decades. We are constantly striving to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our content is honest and reliable. Our award-winning editors and reporters produce honest and reliable content that will help you make the right financial choices. The content created by our editorial staff is objective, truthful and uninfluenced by our advertisers. We’re open about how we are capable of bringing high-quality content, competitive rates, and useful tools to our customers by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services or through you clicking certain hyperlinks on our website. This compensation could affect the way, location and in what order products are listed, except where prohibited by law. We also offer mortgage, home equity and other products for home loans. Other factors, such as our own website rules and whether a product is offered in your area or at your own personal credit score may also influence how and where products appear on this site. We strive to provide a wide range offers, Bankrate does not include the details of every credit or financial product or service. In the third quarter in 2022, we was an examination of what is known as the « new normal » in the wake of the pandemic. worry about the imminent threat and a rise in debt for households. The most notable is that automobile loan debt hit $1.52 billion. That is more than 9 percent of household debt. Additionally, the debt has risen up to levels close to pre-pandemic, according to third quarter report, with delinquencies of 60 days for new vehicle loans sitting at 0.48 percent and used automobile loans at 1.17 percent. An unfortunate mixture of causes has led to this increase of the amount of auto loan debt. One reason is the supply chain issues that have led to the market with record prices for cars. Second are across the board for those who borrow. This is particularly relevant for those who hold a higher likelihood of falling behind or missing payments. Debt and delinquency statistics Overall loan balances grew 7.6 percent during the quarter that ended in the middle of the year 2022. The across the country total is $5,210. Since the beginning of 2022 it has increased in the year 2022, it has increased 1.77 percentage points for a 60-month brand new automobile loan as well as 1.78 percent points on a 48-month used car loan. The amount of loans that are 30 days past due have increased up to 2.19 percentage in the 3rd quarter of 2022 as compared the 1.66 percent in 2021. The percentage of loans that are 60 days delinquent have increased by 0.81 per cent in the 3rd quarter of 2022 as compared the 0.55 per cent in 2021. Men have 16.3 percent than women. The total amount of auto loan and lease total was 1.43 trillion by 2021, compared the 1.6 trillion of student loans.
The scarcity of cars has driven prices up. The main reason for the rise in the amount of auto loan debt over the last few years has been fewer cars on the market, says Bankrate CFA Greg McBride, CFA. « The shortage of new vehicles caused a shortage that drove prices up and bled over into used vehicles when more car buyers shifted towards this the direction of buying, » McBride says. While this trend is gaining momentum, « there was an explosion in the cost of paying and loan balances that were financed when the pandemic hit. » McBride furthers this point by explaining that there’s no more awe-inspiring place to see households living paycheck to paycheck than the driveway. Drivers have faced high vehicle prices due to supply chain issues that resulted in budget-busting payments. The impact of the economy on the amount of debt economy directly impacts drivers’ ability to finance, purchase and repay new or used cars in terms of costs and interest rates available. In addition, with the majority of economic experts saying that recession will continue to increase over the next 12-18 months, this is only one cost that will be more. But even if drivers can afford to purchase a car upfront, the high-interest rates make delinquency and credit card debt a probable reality for a lot of customers. In essence, as the economy struggles with the high rate of inflation, the has been working to stop the problem by raising the benchmark rate. The benchmark rate was has been set at 4.25-4.5 percent in December. This rate determines the amount banks can charge to lend 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 in the form of vehicle prices declining, high rates can increase the amount of people falling behind on repayments and slipping in debt. There’s a tense distinction between less expensive vehicles . However, as is shared optimistically in the report, serious automobile loan default rates are predicted to modestly decline to 1.9 percent in 2023 from 1.95 per cent in 2022. Averagely, drivers pay about $700 monthly 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 a year ago. The average term for subprime borrowers financing new cars is 74.25 during the 3rd quarter in 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 is a 65 percent risk of a recession in the mid-2024 timeframe, according to an .
How to exit the debt. While debt that has been incurred may appear impossible, there’s still ways to get out of the hole that late or missed payments have created. Americans have an average debt of $96,371 by 2021- so if you have been in deep debt it’s not an isolated situation. Take note of these tips to help you get out of the burden of debt. Think about debt consolidation. An debt consolidation loan is a way to pay off your debt. With it, you can save on interest and help you pay back your debt faster. To find the ideal debt consolidation loan there are a few options. Like with every loan you should apply for preapproval to lock in the most favorable rate. Review your budget if you’re owing more than what you have on the bank account it might be a good time to . To alter the amount you spend begin by taking a look at how much you spend and what is it that you’re investing your money on. Try and eliminate common cost items you could eliminate or reduce. Any extra money that is piled up can be used to pay off your credit card. You can request a loan modification If you are in danger of being late on your auto loan This is a method to modify your current loan to fit your financial situation. This process is different from the other one. It involves your present lender and will directly change the loan conditions. Keep in mind that not every lender is willing to modify a loan and you might have to prove your financial hardship.
The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the ins and outs of securely taking out loans to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to take control of their finances through providing precise, well-studied information that break down complicated subjects into bite-sized pieces.
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