Auto loan debt reaches $1.52 trillion Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering you interactive financial calculators and financial tools that provide original and objective content. We also allow users to conduct research and compare information for free and help you make financial decisions with confidence. Bankrate has agreements with issuers, including 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 are from companies that compensate us. This compensation could affect how and where products appear on this site, including such things as the sequence in which they appear in the listing categories, except where prohibited by law. Our mortgage, home equity and other home loan products. However, this compensation will affect the information we provide, or the reviews that you see on this site. We do not contain the entire universe of businesses or financial offers that may be open 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 is a specialist in helping readers in navigating the ways and pitfalls of taking out loans to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to control their finances with concise, well-researched and well-written facts that break down complex topics into manageable bites. The Bankrate promises
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They ensure that what we write is objective, accurate and trustworthy. The loans reporters and editors concentrate on the points consumers care about most — the different types of lending options and the most competitive rates, the most reliable lenders, ways to pay off debt and many more. This means you can feel confident when investing your money. Editorial integrity
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If you have questions about money. Bankrate has the answers. Our experts have helped you understand your money for more than four years. We strive to continuously give our customers the right guidance and the tools necessary 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 information is trustworthy and accurate. Our award-winning editors and journalists produce honest and reliable content to help you make the right financial choices. The content we create by our editorial staff is objective, factual and is not influenced by our advertisers. We’re open regarding how we’re able to bring quality content, competitive rates, and helpful tools to you by explaining how we earn our 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 by you clicking on certain links posted on our site. Therefore, this compensation may influence the manner, place and in what order items are listed and categories, unless it is prohibited by law for our mortgage home equity, mortgage and other home loan products. Other factors, such as our own rules for our website and whether or not a product is available in the area you reside in or is within your personal credit score can also impact how and where products appear on this website. 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 brought an ongoing examination of what is known as the “new normal” in the wake of the pandemic. worry about the imminent threat and a rise in household debt. Most notably, the auto loan debt climbed to $1.52 billion. This is up for more than 9 percent of household debt. On top of that, up to levels close to pre-pandemic, in the third quarter of the report, with 60-day delinquencies for new automobile loans sitting at 0.48 percent, and used automobile loans at 1.17 percent. An unfortunate mixture of factors have led to this rise of automobile loan debt. One is remaining 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 the case for those the highest risk of falling behind or missing payments. Debt and delinquency statistics All-around loan balances increased 7.6 percent during the 3rd quarter in 2022. The average across the nation total is $5,210. Since 2022’s beginning the rate has increased the rate has increased by 1.77 percentage points for a 60 month 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 were increased by 2.19 per cent in 2022’s third quarter as compared the 1.66 percentage in 2021. Loans that are 60 days past due have increased up to 0.81 per cent in the 3rd quarter of 2022 compared to 0.55 per cent in 2021. The average male has 16.3 percent more than women. The total amount of automobile loan and lease total was 1.43 trillion as of 2021 as compared to 1.6 trillion in student loans.
A shortage of vehicles has driven prices up. One reason for the growth in auto loan debt over the recent years has been fewer cars on the market, says Bankrate’s CFA Greg McBride, CFA. “The lack of new cars resulted in a shortage, which pushed prices higher, and this led to the sale of used cars as more car buyers moved towards this the direction of buying,” McBride says. While the trend is growing, “there was an explosion in the amount of money paid and loan balances financed once the pandemic erupted.” McBride furthers this point by explaining that there is no better place to see households living paycheck to paycheck than in the driveway. Drivers have been met with high vehicle prices due to supply chain issues which is causing high-cost payments that are a burden on the budget. What affects the economy on the state of the economy directly affects drivers’ ability to purchase, finance and pay off new or used cars in terms of cost and available interest rates. With 43 percent of economists saying that recession is likely to grow in the next 12-18 months, this is only one of the expenses that will cost more. However, even if people are able afford to purchase a car upfront due to the high interest rates, debt and delinquency a possible truth for many borrowers. In essence, as the economy struggles with the high rate of inflation, the has been working to quell the issue by raising the rate of reference. The benchmark rate was has been set at 4.25-4.5 percent in December. This rate determines the amount banks are able to charge for lending 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 decreasing, high rates may increase the number of people falling behind on payments and in debt. There’s a conflicting perception between less expensive vehicles . However, as is shared optimistically in the report, serious auto loan late fees are anticipated to moderately decrease to 1.9 percent by 2023, from 1.95 per cent in 2022. Averagely, drivers pay an average of $700 per month for a brand new car, or $525 for a month as of this third quarter, 2022. The consumer price index sits at 298.1 at the mid-December timeframe, which is up from 278.9 one year ago. The average term for subprime borrowers who finance new cars was 74.25 during the 3rd quarter in 2022. The average interest rate for brand new cars during the 3rd quarter in 2022 was 5.16 percent, and 9.34 percent for used vehicles. There is the risk of 65 percent of a recession in the mid-2024 timeframe, according to an .
How to get out of debt While incurred debt can feel inescapable there are still steps you can take to escape the gap that late or missed payments have caused. Americans had an average balance of $96,371 by 2021- so if you have been in deep debt there’s no reason to feel alone. Consider the following tips to help you overcome debt. Look into debt consolidation. The debt consolidation loan is a type of your debt. With it, you can save on interest and help you repay the debt more quickly. To find the best debt consolidation loan a few offers. As with any loan, apply for preapproval in order to secure the lowest rate you can get. Reassess your budget If you owe more than what you have in your bank account it might be an ideal time to . In order to adjust the amount you spend first, take the time to look at what you’re spending and what you’re spending it on. Try and eliminate common cost items you could eliminate or reduce. Any extra money that is piled up can be used to pay down your credit card. Request loan modification if you’re at risk of falling behind with your vehicle loan This is a method to change your current loan to better suit your financial situation. In contrast to the previous method, this one is handled with you present lender and will alter your loan conditions. Be aware that not all lender will be willing to change the terms of an loan and you might 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 taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances with concise, well-researched and well-researched content that break down complicated topics into digestible pieces.
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