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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 providing you with interactive tools and financial calculators that provide original and objective content. We also allow you to conduct research and compare information for free to help you make informed 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 deals that are displayed on this website are provided by companies that compensate us. This compensation could affect how and where products are displayed on the site, such as for instance, the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law. This applies to our mortgage, home equity, and other home lending products. This compensation, however, does affect the information we provide, or the reviews that you read on this site. We do not contain the vast array of companies or financial offers that may be available to you. Jackal Pan/Getty Images

3 min 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 helping readers with the details of borrowing money to purchase cars. 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 passionate about helping readers gain confidence to take control of their finances through providing clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate guarantee

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Founded in 1976, Bankrate has a long track experience of helping customers make smart financial choices.

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They ensure that what we write is objective, accurate and trustworthy. Our loans reporters and editors are focused on the areas that consumers are concerned about the most — different types of lending options as well as the best rates, the top lenders, how to repay debt and much more. So you’ll be able to feel secure when making a decision about your investment. Editorial integrity

Bankrate follows a strict standard of conduct, which means you can be confident that we’re putting your interests first. Our award-winning editors and journalists provide honest and trustworthy content to assist you in making the right financial decisions. Our main principles are that we appreciate your trust. Our goal is to offer readers reliable and honest information, and we have standards for editorial content in place to ensure this happens. Our reporters and editors rigorously fact-check editorial content to ensure the information you’re reading is accurate. We keep a barrier between our advertisers and our editorial team. The editorial team of Editorial Independence Bankrate does not receive any direct payment through our sponsors. Editorial Independence Bankrate’s editorial team writes on behalf of YOU the reader. Our aim is to provide you the best advice to help you make smart personal finance decisions. We adhere to strict guidelines in order to make sure that the content we publish isn’t affected by advertisements. Our editorial team is not paid direct compensation from advertisers, and all of our content is checked for accuracy to ensure its truthfulness. Therefore whether you’re reading an article or a report you can be sure that you’re getting reliable and dependable information. How we earn money

If you have questions about money. Bankrate has the answers. Our experts have helped you understand your finances for more than four decades. We strive to continuously give our customers the right advice and tools required to succeed throughout life’s financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the best financial decisions. The content created by our editorial team is factual, objective and uninfluenced by our advertisers. We’re transparent regarding how we’re able to bring quality information, 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 promotion of sponsored goods and services, or when you click on certain hyperlinks on our website. This compensation could affect the way, location and when products appear in listing categories in the event that they are not permitted by law. This is the case for our mortgage, home equity and other home loan products. Other factors, such as our own rules for our website and whether or not a product is available in your area or at your own personal credit score can also impact how and where products appear on this website. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The third quarter of 2022 saw a continued examination into what is known as the « new normal » in the wake of the pandemic. fear of the looming and an increase in household debt. Most notably, automobile loan debt reached $1.52 billion. This accounts for more than 9 percent of all household debt. On top of that, to near pre-pandemic levels in the third quarter of the report, with delinquencies of 60 days for new automobile loans in the range of 0.48 percent and for used car loans at 1.17 percent. A plethora of unlucky causes has led to this increase on auto loan debt. One of them is supply chain issues that have led to record-high vehicle prices. The other is that there are a variety of issues for those who borrow. This is particularly true for those with the highest risk of being in debt or failing to make payments. Debt and delinquency statistics Overall loan balances increased 7.6 percent during the quarter that ended in the middle of the year 2022. The total across the United States total is $5,210. Since the start of 2022 it has increased by 1.77 percentage points for a 60-month new automobile loan and 1.78 percentage points to get a 48-month used car loan. The amount of loans that are 30 days past due were increased by 2.19 percentage in the 3rd quarter of 2022, compared with 1.66 per cent in 2021. The percentage of loans that are 60 days late have risen to 0.81 per cent in the 3rd quarter of 2022, compared to 0.55 percentage in 2021. The average male has 16.3 percent more than women. The total amount of automobile loan and lease was 1.43 trillion in 2021 compared to 1.6 trillion in student loans.

A scarcity of vehicles has led to higher prices. The main reason for the rise in the amount of auto loan debt over the last few times has been the fewer vehicles available, explains Bankrate CFA Greg McBride, CFA. « The shortage of new cars caused a shortage that drove prices up and bled over into used vehicles since more buyers moved in that the direction of buying, » McBride says. While the trend is growing, « there was an explosion in the amount of money paid and loan balances that were financed after the pandemic struck. » McBride furthers this argument by saying that there’s no better place to see households that are living paycheck to paycheck than in their driveways. Drivers have faced pricey vehicles due to problems with supply chains, which is causing the need for budget-busting payment. What affects the economy on debt The state of the economy directly impacts drivers’ ability to finance, purchase and pay off new or used vehicles with regard to cost and available interest rates. And with 43 percent of economists predicting that recession will continue to expand over the next 12-18 months, is just one expense that will cost more. However, even if people are able to finance a vehicle upfront, the high-interest rates make delinquency and credit card debt a probable truth for many borrowers. Simply, as the economy is struggling with high inflation rates The government has been working to stop the problem by increasing the benchmark rate. The benchmark rate, has been set at 4.25-4.5 percent in December. This rate informs how much banks can charge to lend funds to banks that do not have a bank. This will affect the interest rates of consumer goods, such as car loans. Although relief was offered in the form of vehicle prices decreasing, high rates may increase the number of people falling behind on payments and in debt. There is a challenging dichotomy between less expensive vehicles . As optimistically stated in the article, serious auto loan default rates are anticipated to decrease modestly to 1.9 percent in 2023 from 1.95 per cent in 2022. Averagely, drivers pay the equivalent of $750 a month for a new car or $525 for a month in the third quarter of 2022. The consumer price index was at 298.1 at the mid-December timeframe, which is up from 278.9 one year ago. The average term used by subprime borrowers financing new vehicles were 74.25 for the quarter ending March 31, 2022. The average interest rate for new cars during the 3rd quarter in 2022 was 5.16 percent, and 9.34 percent for used. There’s an 85% chance of a recession by mid-2024 according to the .

How to get out of debt Although debt may feel inescapable there are still steps you can take to get out of the hole that late or missed payments have caused. Americans were in debt on average of $96,371 as of 2021If you’ve experienced a debt crisis there’s no reason to feel alone. Use these suggestions to help you get out of debt. Think about debt consolidation. A credit consolidation loan is a way to pay off your debt. It can help you save on interest and help you pay back the debt more quickly. To locate the most effective debt consolidation loan a few offers. As with any loan one should seek preapproval before you can lock in the best rate possible. Check your budget. If you owe more than you have to pay in your bank account it might be an ideal time to . To adjust the amount you spend, start by taking the time to look at what you spend and what you’re spending it on. Make sure to eliminate the common items that you can eliminate or cut back. Any extra money that is piled up could be used to pay down your credit card. You can request a loan modification if you’re in danger of becoming behind on your auto loan This is a method to alter the terms of your current loan to suit your financial circumstances. Different from , this process is done with the current lender and will change your loan conditions. Keep in mind that not all lender will agree to change the terms of a loan, and you may need to provide proof of your hardship.

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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to control their finances through providing precise, well-studied information that dissects complex topics into manageable bites.

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