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 providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct your own research and compare information for free – so that you can make financial decisions with confidence. 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 products that appear on this site come from companies who pay us. This compensation may impact how and when products are featured on this site, including, for example, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. Our loan products, such as mortgages and home equity, and other products for home loans. This compensation, however, does affect the content we publish or the reviews that you see on this site. We do not cover the universe of companies or financial deals that might be available to you. Jackal Pan/Getty Images
3 minutes read. Published December 19, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers to navigate the ins and outs of securely borrowing money to buy a car. 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 the confidence to manage their finances through providing precise, well-researched, and well-documented information that breaks down complex topics into manageable bites. The Bankrate guarantee
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who ensure everything we publish will ensure that our content is reliable, honest and trustworthy. Our loans reporters and editors concentrate on the areas that consumers are concerned about the most — various kinds of lending options and the most competitive rates, the best lenders, the best ways to repay debt, and much more. So you’ll feel safe investing your money. Editorial integrity
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If you have questions about money. Bankrate has answers. Our experts have helped you understand your money for more than four decades. We strive to continuously provide consumers with the expert guidance and the tools necessary to succeed throughout life’s financial journey. Bankrate follows a strict policy, which means you can be confident that our content is honest and precise. Our award-winning editors and reporters create honest and accurate content that will help you make the right financial decisions. Our content produced by our editorial team 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 our customers by describing 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 specific links on our website. Therefore, this compensation may influence the manner, place and in what order products appear within listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. Other elements, like our own proprietary website rules and whether the product is available in your area or at your own personal credit score could also affect how and where products appear on this site. We strive to provide a wide range offers, Bankrate does not include the details of each financial or credit item or service. In the third quarter in 2022, we brought a continued examination into”the “new normal” after the pandemic, fear of the looming and a rise in household debt. Particularly, the auto loan debt reached $1.52 billion. This makes up for more than 9 percent of the household debt. On top of that, up to levels close to pre-pandemic, according to third quarter report, 60-day delinquencies for new vehicle loans being 0.48 percent, and used automobile loans at 1.17 percent. An unfortunate mixture of factors have led to this rise on automobile loan debt. One of them is supply chain issues that have led to the market with record prices for cars. Second are across the board for those who borrow. This is particularly relevant for those the highest risk of being in debt or failing to make payments. Statistics on delinquency and debt loan balances increased by 7.6 percent in the third quarter of 2022. The across the country is $5,210. Since the beginning of 2022, the rate has increased by 1.77 percentage points for a 60-month brand new automobile loan or 1.78 percent points on a used 48-month car loan. Loans that are 30 days late increased by 2.19 percentage in the 3rd quarter of 2022 compared to 1.66 percentage 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 per cent in 2021. The average male has 16.3 percent more than women. Total car loan and lease was 1.43 trillion in 2021, compared the 1.6 trillion for student loans.
The scarcity of cars has led to higher prices. One reason for the growth in auto loan debt in recent years is the lack of cars available, explains Bankrate’s CFA Greg McBride, CFA. “The shortage of new vehicles caused a shortage that drove prices up and bled over into used vehicles as more car buyers moved toward this trend,” McBride says. And while this trend has been building, “there was an explosion in the amount of money paid and loan balances that were financed when the pandemic erupted.” 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 pricey vehicles due to supply chain issues that is causing high-cost payments that are a burden on the budget. The impact of the economy on the amount of debt economy directly impacts drivers’ ability to finance, purchase and repay new or used vehicles with regard to cost and available interest rates. And with 43 percent of economists forecasting that recession is likely to increase in 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 truth for many borrowers. Simplyput, as the country grapples with steep inflation rates and rising interest rates, the government has been trying to stop the problem by increasing the benchmark rate. The benchmark rate, has been set at 4.25-4.5 percent in December. This rate reveals how much banks can charge to lend funds to banks that do not have a bank. This will affect the interest rates of consumer products, like car loans. Even as relief came with the help of car price reductions, higher rates could increase the number of individuals falling behind on payment and falling in debt. There’s a conflicting perception between vehicles that are less expensive . But as optimistically shared in , serious auto loan delinquency rates are anticipated to decrease modestly to 1.9 percent by 2023, from 1.95 percent in 2022. Averagely, drivers pay about $700 per month to purchase a brand-new car as well as $525 monthly as of this third quarter, 2022. The consumer price index sits at 298.1 in mid-December, an increase from 278.9 last year. The average loan term for subprime lenders who finance new cars is 74.25 for the quarter ending March 31, 2022. The average interest rate for brand new cars for the quarter ending in March of 2022 averaged 5.16 percent, and 9.34 percent for used cars. There’s the risk of 65 percent of a recession before the middle of 2024, according to the .
How to exit debt While incurred debt can seem impossible to escape, there is ways to get out of the hole that late or missed payments have created. Americans have an average debt of $96,371 by 2021therefore if you’ve been in deep debt there’s no reason to feel alone. Consider the following tips when trying to get out of debt. Look into debt consolidation. A credit consolidation loan is a form of your debt. With it, you can save on interest and help you pay back debt at a faster rate. To locate the most effective debt consolidation loan you can look through a variety of offers. Like with every loan you should apply for preapproval before you can lock in the most favorable rate. Reassess your budget If you have more debt than what you have in the bank account it might be a good time to . To alter your spending first, take the time to look at what you’re spending and the things 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 cash that comes up could be used to pay down your debt. Request loan modification if you’re in danger of being late on your auto loan It is a means to change your current loan to better suit your financial circumstances. This process is different from the other one. It is handled with your current lender and will alter your loan terms. Keep in mind that not all lender will be willing to modify the terms of a loan and you may require 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 specializes in assisting readers to navigate the ways and pitfalls of borrowing money 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 dedicated to helping readers gain the confidence to take control of their finances by providing concise, well-researched and well-researched content that dissects complicated subjects into bite-sized pieces.
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