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 smarter financial decisions by offering interactive tools and financial calculators that provide original and objective content, by enabling you to conduct research and compare information for free to help you make sound financial decisions. 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 products that appear on this site come from companies who pay us. This compensation can affect the way and where products appear on this site, including such things as the order in which they appear within the listing categories, except where prohibited by law. Our loans, mortgages, and other home loan products. But this compensation does affect the content we publish or the reviews that you see on this site. We do not contain the universe of companies or financial deals that might be available 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 specializes in helping readers to navigate the details of taking out loans to buy a car. Edited 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 the confidence to control their finances through providing precise, well-researched, and well-documented information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promises
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for more than four decades. We strive to continuously give our customers the right 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 reliable. Our award-winning editors and journalists produce honest and reliable content that will help you make the right financial decisions. The content created by our editorial staff is objective, truthful and is not influenced from our advertising. We’re open about how we are in a position to provide quality content, competitive rates, and useful tools for you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and services or through you clicking certain links posted on our website. So, this compensation can influence the manner, place and in what order products appear in listing categories in the event that they are not permitted by law for our mortgage, home equity and other products for home loans. Other elements, like our own website rules and whether or not a product is available in the area you reside in or is within your own personal credit score may also influence the way and place products are listed on this site. Although we try to offer an array of offers, Bankrate does not include the details of every financial or credit product or service. In the third quarter in 2022, we was an ongoing investigation of the “new normal” following the pandemic, anxiety about the threat of a new outbreak, and the increase in household debt. Most notably, the auto loan debt climbed to $1.52 billion. That makes up for more than 9 percent of all household debt. Additionally, the debt has risen to levels that are close to pre-pandemic as per the third quarter report, with 60-day delinquencies for new vehicle loans in the range of 0.48 percent, and used automobile loans with 1.17 percent. An unfortunate mixture of causes has led to this increase in auto loan debt. One is remaining supply chain issues leaving record-high prices for vehicles. Another is the general risk for borrowers. This is especially the case for those more of a chance of falling behind or missing payments. Debt and delinquency statistics Overall loan balances increased by 7.6 percent in 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, by 1.77 percentage points for a 60 month new vehicle loan as well as 1.78 percent points on a 48-month used car loan. A loan that is 30 days delinquent increased by 2.19 percent in the third quarter of 2022 as compared the 1.66 per cent in 2021. Loans that are 60 days past due have increased up to 0.81 percent in the third quarter of 2022 compared to 0.55 percentage in 2021. Men are able to get 16.3 percent than women. Total automobile loan and lease total was 1.43 trillion in 2021 as compared to 1.6 trillion of student loans.
The scarcity of cars has led to higher prices. One reason for the growth in auto loan debt in recent years has been fewer cars available, explains Bankrate’s CFA Greg McBride, CFA. “The shortage of new cars caused a shortage that drove prices up, and this bled over into used vehicles when more car buyers shifted towards this trend,” McBride says. And while the trend is growing, “there was an explosion in prices paid and loan balances that were financed after the pandemic erupted.” McBride furthers this argument by saying that there is no better location to observe families living paycheck-to-paycheck than in the driveway. Drivers have faced pricey vehicles due to supply chain issues that is causing budget-busting payments. How the economy affects the amount of debt economy directly impacts the ability to purchase, finance and pay off new or used cars in terms of cost and interest rates available. And with 43 percent of economists forecasting that the recession will continue to increase over the next 12 to 18 months, it’s just one cost that will be more. But even if drivers can borrow money to purchase a car in the first place due to the high interest rates, delinquency and credit card debt a probable possibility for many people who borrow. Simplyput, as the country grapples with steep inflation rates The government has been working to stop the problem by raising the rate of reference. The benchmark rate was increased to 4.25-4.5 percent for December. This rate reveals how much banks can charge to lend money to other banks, which then affects interest rates for consumer goods like automobile loans. While relief did come with the help of car prices decreasing, high rates may increase the number of people who are in debt payments and entering debt. There is a challenging dichotomy between cheaper vehicles . However, as is shared optimistically in the report, serious automobile loan late fees are expected to decrease modestly to 1.9 percent in 2023 from 1.95 percent in 2022. Averagely, drivers pay an average of $700 per month to purchase a brand-new car and $525 per month in this third quarter, 2022. The consumer price index was at 298.1 at the mid-December timeframe, which is up from 278.9 a year ago. The average loan term for subprime lenders who finance new cars were 74.25 for the quarter ending March 31, 2022. Average interest rate for new cars in the third quarter of 2022 was 5.16 percent and 9.34 percent for used cars. There is a 65 percent risk of a recession by mid-2024 according to an .
How to escape debt Although debt may seem impossible to escape, there is concrete you can take to get out of the gap that late or missed payments have created. Americans had an average balance of $96,371 by 2021- so if you have been in deep debt, you aren’t alone. Take note of these tips when trying to get out of the debt. Consider debt consolidation The debt consolidation loan is a type of your debt. It can help you lower your interest costs and assist you pay back the debt more quickly. To find the best debt consolidation loan a few offers. Like any loan one should seek preapproval to lock in the most favorable rate. Check your budget. If you owe more than what’s to pay in the bank account it might be a good time to . To alter your spending, 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 remove or reduce. Any extra cash that comes up can be used to pay off your debt. Request loan modification if you’re in danger of becoming behind in your car loan It is a means to change the terms of your current loan to fit your financial needs. Different from , this process is handled with your existing lender and will alter your loan conditions. Be aware that not all lender is willing to alter the terms of a loan, and you may have to prove 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 details of borrowing money to buy a car. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to control their finances through providing concise, well-researched and well-researched content that break down complicated topics into digestible pieces.
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