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 smarter financial decisions by providing you with interactive financial calculators and financial tools, publishing original and objective content. We also allow users to conduct research and compare data for free – so that you can make informed financial decisions. Bankrate has partnerships with issuers such as, 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 website are provided by companies who pay us. This compensation can affect the way and where products are displayed on this site, including, for example, the sequence in which they be listed within the categories of listing in the event that they are not permitted by law. Our loans, mortgages,, and other home lending products. This compensation, however, does not influence the information we publish, or the reviews appear on this website. We do not include the universe of companies or financial deals that might be available to you. Jackal Pan/Getty Images
3 min read Published 19 December 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 to navigate the ways and pitfalls of taking out loans to buy an automobile. 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 confidence to take control of their finances with concise, well-researched and well-written information that breaks down complicated subjects into digestible pieces. The Bankrate guarantee
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your money for over four years. We are constantly striving to provide consumers with the expert guidance and the tools necessary to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is truthful and precise. Our award-winning editors and reporters create honest and accurate information to assist you in making the right financial choices. The content we create by our editorial staff is objective, factual, and not influenced through our sponsors. We’re open about how we are 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 by you clicking on certain hyperlinks on our site. This compensation could influence the manner, place and in what order products appear within listing categories, except where prohibited by law. This is the case for our mortgage home equity, mortgage and other products for home loans. Other factors, like our own website rules and whether a product is available in the area you reside in or is within your self-selected credit score range may also influence the manner in which products appear on this website. We strive to provide a wide range offers, Bankrate does not include the details of every financial or credit product or service. The third quarter of 2022 was an examination of”the “new normal” after the pandemic, worry about the imminent threat and the increase in household debt. Most notably, automobile loan debt climbed to $1.52 billion. This makes up for more than 9 percent of all household debt. On top of that, to levels that are close to pre-pandemic according to third quarter report, 60-day delinquencies for new automobile loans being 0.48 percent, and used car loans in the range of 1.17 percent. An unfortunate mix of factors has created this increase of automobile loan debt. One reason is the supply chain issues leaving record-high prices for vehicles. Second are across the board for those who borrow. This is especially true for those with the highest risk of falling behind or missing payments. Debt and delinquency statistics All-around loan balances grew 7.6 percent in the third quarter of 2022. The total across the United States total is $5,210. Since the start of 2022 the rate has increased the rate has increased by 1.77 percentage points for a 60-month brand new vehicle loan as well as 1.78 percentage points for a used 48-month car loan. A loan that is 30 days past due have increased by 2.19 percentage in the 3rd quarter of 2022 as compared to 1.66 per cent in 2021. A loan that is 60 days late have risen up to 0.81 percent in the third quarter of 2022 as compared to 0.55 per cent in 2021. The average male has 16.3 percent than women. The total amount of car loan and lease value was 1.43 trillion in 2021 as compared to 1.6 trillion for student loans.
A scarcity of vehicles has driven prices up. One reason for the growth in the amount of auto loan debt in recent years has been fewer cars on the market, says Bankrate’s chief financial analyst Greg McBride, CFA. “The lack of new cars resulted in a shortage, which pushed prices up, and this bled over into used vehicles when more car buyers shifted towards this direction,” McBride says. As this trend is gaining momentum, “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 more awe-inspiring spot to see families living paycheck to paycheck than in their driveways. Drivers have been confronted with the cost of vehicles to be a result of supply chain issues that is causing high-cost payments that are a burden on the budget. The impact of the economy on debt The state of the economy directly impacts the capacity to buy, finance and pay off used or new cars with regard to cost and the interest rates that are available. With the majority of economic experts saying that recession is likely to expand over the next 12-18 months, is just one of the expenses that will cost more. Even if drivers are able to finance a vehicle upfront, the high-interest rates make debt and delinquency a possible truth for many borrowers. In essence, as the economy grapples with steep inflation rates and rising interest rates, the government has been trying to quell the issue by increasing rates of benchmarking. The benchmark rate, has been set at 4.25-4.5 percent during December. This rate reveals how much banks are able to charge for lending cash to different banks, which will affect the interest rates of consumer goods like automobile loans. While relief did come in the form of vehicle prices decreasing, high rates could increase the number of individuals falling behind on payment and falling entering debt. There’s a conflicting perception between less expensive vehicles . But as optimistically shared in the report, serious automobile loan default rates are expected to moderately decrease to 1.9 percent by 2023, from 1.95 percentage in 2022. On average drivers paid the equivalent of $750 per month for a new car or $525 for a month for a used car as of the 3rd quarter in 2022. The index of consumer prices was at 298.1 in mid-December, up from 278.9 one year ago. The average term for subprime borrowers financing new cars is 74.25 in the third quarter of 2022. Average interest rate for new vehicles in the third quarter of 2022 was 5.16 percent and 9.34 percent for used. There is the risk of 65 percent of a recession by mid-2024 according to a .
How to exit debt While incurred debt can appear impossible, there’s still concrete you can take to dig yourself 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 fallen into deep debt it’s not an isolated situation. Take note of these tips in your quest to overcome debt. Consider debt consolidation An consolidating debt loan is a type of your debt. It can help you save on interest and help you repay the debt more quickly. To locate the most effective debt consolidation loan you can look through a variety of offers. As with any loan you should apply for preapproval before you can lock in the most favorable rate. Review your budget if you owe more than you have in the bank account it might be the perfect time to . To adjust the amount you spend first, take an inventory of how much you spend and what is it that you’re investing your money on. Try and eliminate common cost items that you can eliminate or cut down. Any extra cash that comes up could be used to repay your debt. Make a request for loan modification If you are in danger of being late on your auto loan, is a way to change your current loan to fit your financial situation. This process is different from the other one. It involves the present lender and will change the loan terms. Be aware that not every lender will be willing to modify the terms of a loan, and you may need to provide proof of 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 to navigate the ways and pitfalls of taking out loans to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances with clear, well-researched information that breaks down otherwise complex topics into manageable bites.
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