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 decisions by offering you interactive financial calculators and financial tools that provide original and objective content. This allows you to conduct your own research and compare information at no cost to help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the sequence in which they appear within the listing categories and other categories, unless prohibited by law. Our loan products, such as mortgages and home equity and other home lending products. This compensation, however, does affect the content we publish or the reviews you read on this site. We do not cover the universe of companies or financial offers that may be available to you. Jackal Pan/Getty Images
3 min read Published 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 in navigating the ways and pitfalls of borrowing money to buy an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances by providing concise, well-researched and well-written facts that break down complicated subjects into digestible pieces. The Bankrate guarantee
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They ensure that what we write will ensure that our content is reliable, honest and trustworthy. The loans reporter and editor concentrate on the areas that consumers are concerned about most — the different types of lending options and the most competitive rates, the best lenders, the best ways to repay debt and many more. This means you can feel confident when investing your money. Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct standard of conduct, so you can rest assured that our content is honest and accurate. Our award-winning editors, reporters and editors create honest and accurate content that will help you make the right financial choices. Our content produced by our editorial staff is factual, objective, and not influenced through our sponsors. We’re open regarding how we’re able to bring quality information, 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 the promotion of sponsored goods and, services, or by you clicking on specific links on our website. Therefore, this compensation may affect the way, location and in what order products appear in listing categories in the event that they are not permitted by law. We also offer mortgage home equity, mortgage and other home loan products. Other factors, like our own proprietary website rules and whether or not a product is available in your region or within your own personal credit score may also influence the manner in which products appear on this site. We strive to provide a wide range offers, Bankrate does not include details about every financial or credit product or service. Third quarter 2022 brought an ongoing exploration of what is known as the “new normal” after the pandemic, worry about the imminent threat and the increase in debt for households. Particularly, automobile loan debt climbed to $1.52 billion. This accounts for more than 9 percent of household debt. Additionally, the debt has risen to near pre-pandemic levels in the third quarter of the report, with delinquencies of 60 days for new automobile loans sitting at 0.48 percent, and used automobile loans at 1.17 percent. A plethora of unlucky causes has led to this increase of automobile loan debt. One is remaining supply chain issues leaving record-high prices for vehicles. Another is the general risk for those who borrow. This is particularly relevant for those who hold a higher likelihood of being in debt or failing to make the payment. Debt and delinquency statistics Overall loan balances increased 7.6 percent in the third quarter of 2022. The total across the United States total is $5,210. Since the start of 2022, in the year 2022, it has increased 1.77 percentage point for a 60-month brand new vehicle loan and 1.78 percentage points to get a used 48-month car loan. The amount of loans that are 30 days late have increased up to 2.19 percent in the third quarter of 2022, compared with 1.66 percentage in 2021. The percentage of loans that are 60 days past due have increased by 0.81 per cent in the 3rd quarter of 2022, compared to 0.55 percentage in 2021. The average male has 16.3 percent than women. Total car loan and lease was 1.43 trillion as of 2021 compared with 1.6 trillion in student loans.
A scarcity of vehicles has driven prices up. One cause of the increase in the amount of auto loan debt over the last few years has been fewer cars on the market, says Bankrate’s chief financial analyst Greg McBride, CFA. “The shortage of new cars created a scarcity that pushed prices up and led to the sale of used cars when more car buyers shifted toward 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 financed once 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 in the driveway. Drivers have faced high vehicle prices due to problems with supply chains, which resulted in budget-busting payments. How the economy affects the state of the economy directly affects drivers’ ability to purchase, finance and repay new or used vehicles in terms of cost and interest rates available. In addition, with nearly 43 percent of the economists forecasting that recession will continue to increase in the next 12 to 18 months, this is only one expense that will cost more. But even if drivers can borrow money to purchase a car in the first place, the high-interest rates make the possibility of delinquency and debt a truth for many customers. Simply, as the economy struggles with the high rate of inflation and rising interest rates, the government has been trying to stop the problem by increasing rates of benchmarking. The benchmark rate, increased to 4.25-4.5 percent for December. This rate reveals how much banks can charge to lend money to other banks, which will affect the interest rates of consumer goods like automobile loans. Although relief was offered in the form of vehicle prices decreasing, high rates could increase the number of people falling behind on payments and into debt. There’s a conflicting perception between less expensive vehicles . However, as is shared optimistically in the article, serious automobile loan delinquency rates are anticipated to moderately decrease to 1.9 percent in 2023 from 1.95 percent in 2022. On average drivers paid an average of $700 a month for a new car or $525 for a month for a used car as of the third quarter of 2022. The consumer price index sits at 298.1 in mid-December, an increase from 278.9 a year ago. The average term for subprime borrowers who finance new cars were 74.25 in the third quarter of 2022. The average interest rate for new cars in the third quarter of 2022 was 5.16 percent and 9.34 percent for used vehicles. There is an 85% chance of a recession in the mid-2024 timeframe, 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 dig yourself out of the gap that late or missed payments have caused. Americans were in debt on average of $96,371 in 2021 -If you’ve been in deep debt there’s no reason to feel alone. Consider the following tips to help you remove yourself from the debt. Consider debt consolidation A debt consolidation loan is a type of your debt. It can help you reduce the cost of interest and help you pay back your debt faster. To find the ideal debt consolidation loan a few offers. Like any loan you should apply for preapproval in order to secure the lowest rate you can get. Review your budget if you’re owing more than what you have on your bank account it might be a good time to . In order to adjust your spending begin by taking the time to look at what you spend and what are you spending your cash on. Look for common-cost items that you can remove or cut back. Any extra cash that comes up could be used to pay off your debt. Request loan modification If you are in danger of being late on your auto loan It is a means to modify your current loan to better suit your financial circumstances. This process is different from the other one. It is handled with the present lender and will change your loan conditions. Remember that not every lender is willing to modify a loan, and you may require proof of your financial hardship.
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ways and pitfalls of borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to take control of their finances through providing precise, well-studied information that breaks down otherwise complex topics into manageable bites.
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