Auto loan debt reaches $1.52 trillion Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering interactive financial calculators and tools as well as publishing quality and impartial content. We also allow you to conduct your own research and compare information at no cost to help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies that compensate 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 in the listing categories in the event that they are not permitted by law for our loans, mortgages,, and other home lending products. But this compensation does not influence the information we provide, or the reviews you read on this site. We do not cover the universe of companies or financial offerings that could be accessible to you. Jackal Pan/Getty Images
3 minutes read. Published on December 19, 2022.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ins and outs of securely taking out loans to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain confidence to control their finances by providing concise, well-researched and well-written information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate guarantee
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You have money questions. Bankrate can help. Our experts have helped you understand your finances for more than four years. We continually strive to provide our readers with the professional guidance and the tools necessary to make it through life’s financial journey. Bankrate adheres to strict standards standard of conduct, so you can rest assured that our content is honest and precise. Our award-winning editors, reporters and editors provide honest and trustworthy information to assist you in making the right financial choices. The content created by our editorial team is objective, truthful and uninfluenced by our advertisers. We’re open about the ways we’re able to bring quality information, competitive rates and helpful tools to you by explaining 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 by you clicking on certain links posted on our site. This compensation could influence the manner, place and in what order products appear within listing categories and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other home loan products. Other factors, such as our own rules for our website and whether a product is available within your region or within your self-selected credit score range could also affect how and where products appear on this site. While we strive to provide an array of offers, Bankrate does not include information about every credit or financial product or service. The third quarter of 2022 saw a continued investigation into»the «new normal» in the wake of the pandemic. worry about the imminent threat and a rise in debt for households. Particularly, auto loan debt climbed to $1.52 billion. That is more than 9 percent of household debt. On top of that, to near pre-pandemic levels according to third quarter report, 60-day delinquencies for new vehicle loans sitting at 0.48 percent, and used car loans at 1.17 percent. An unfortunate mix of causes has led to this increase on automobile loan debt. One reason is the supply chain issues leaving record-high vehicle prices. Second are across the board for borrowers. This is especially true for those with the highest risk of being in debt or failing to make a payment. Debt and delinquency statistics All-around loan balances grew 7.6 percent during the third quarter of 2022. The average across the nation is $5,210. Since 2022’s beginning, in the year 2022, it has increased 1.77 percent for a 60-month new car loan and 1.78 percentage points for a used 48-month car loan. A loan that is 30 days late were increased up to 2.19 percentage in the 3rd quarter of 2022, compared to 1.66 percent in 2021. A loan that is 60 days past due have increased by 0.81 percent in the third quarter of 2022 as compared with 0.55 percent in 2021. The average male has 16.3 percent than women. Total automobile loan and lease value was 1.43 trillion by 2021 compared the 1.6 trillion of student loans.
The scarcity of cars has driven prices up. One cause of the increase in the amount of auto loan debt over the recent years has been fewer cars on the market, says Bankrate CFA Greg McBride, CFA. «The lack of new cars caused a shortage that drove prices up, and this bled over into used vehicles when more car buyers shifted toward this direction,» McBride says. As the trend is growing, «there was an explosion in the amount of money paid and loan balances that were financed when the pandemic erupted.» McBride furthers this idea by pointing out that there’s no better place to see households that are living paycheck to paycheck than the driveway. Drivers have been met with pricey vehicles due to supply chain issues that in turn has led to budget-busting payments. The impact of the economy on debt The state of the economy directly impacts drivers’ ability to purchase, finance and repay new or used vehicles in terms of cost and available interest rates. With 43 percent of economists forecasting that recession is likely to increase in the next 12-18 months, it’s just one cost that will be more. But even if drivers can afford to purchase a car upfront due to the high interest rates, the possibility of delinquency and debt a possibility for many borrowers. In essence, as the economy struggles with the high rate of inflation, the has been working to quell the issue by increasing rates of benchmarking. The benchmark rate was increased to 4.25-4.5 percent during December. This rate determines the amount banks are able to charge for lending funds to banks that do not have a bank. This can affect interest rates for consumer goods, such as car loans. Although relief was offered through the form of lower vehicle price reductions, higher rates could increase the number of people falling behind on payment and falling in debt. There is a challenging dichotomy between less expensive vehicles . But as optimistically shared in the article, serious auto loan late fees are expected to moderately decrease to 1.9 percent in 2023 , down from 1.95 per cent in 2022. On average drivers paid an average of $700 per month to purchase a brand-new car and $525 per month as of 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 used by subprime borrowers who finance new cars is 74.25 for the quarter ending March 31, 2022. The average interest rate for brand new vehicles in the third quarter of 2022 was 5.16 percent, and 9.34 percent for used vehicles. There’s an 85% chance of a recession by mid-2024 according to the .
How to get out of debt While incurred debt can seem impossible to escape, there is ways to get out of the hole that missed or late payments have caused. Americans have an average debt of $96,371 by 2021- so if you have experienced a debt crisis, you aren’t alone. Take note of these tips in your quest to get out of the burden of debt. Look into debt consolidation. An consolidating debt loan is a form of your debt. With it, you can lower your interest costs and assist you pay back the debt more quickly. To find the ideal 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 most favorable rate. Check your budget. If you’re owing more 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’re spending and what is it that you’re investing your money on. Make sure to eliminate the common items that you can remove or cut back. Any extra money that is piled up can be used to repay your credit card. Make a request for loan modification If you are at risk of falling behind in your car loan, is a way to modify your current loan to better suit your financial needs. This process is different from the other one. It involves you current lender and will change your loan conditions. Be aware that not all lender is willing to alter the terms of a loan and you might need to provide proof of your hardship.
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ways and pitfalls of taking out loans to purchase a car. 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 the confidence to manage their finances through providing precise, well-studied information that breaks down otherwise complicated subjects into bite-sized pieces.
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