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 better financial choices by offering you interactive financial calculators and financial tools as well as publishing quality and impartial content. This allows users to conduct research and compare information at no cost – so that you can make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this website are provided by companies who pay us. This compensation could affect how and where products are displayed on this website, for example, for example, the order in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our loan products, such as mortgages and home equity, and other home lending products. This compensation, however, does not influence the information we publish, or the reviews that you see on this site. We do not contain the entire universe of businesses or financial deals that might be accessible 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 specializes in helping readers to navigate the details of borrowing money to buy a car. Written 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 confidence to take control of their finances through providing clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promise
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There are money-related questions. Bankrate can help. Our experts have been helping you master your finances for more than four years. We continually strive to provide our readers with the professional advice and tools required to be successful throughout their financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our content is truthful and reliable. Our award-winning editors, reporters and editors provide honest and trustworthy content that will help you make the right financial choices. Our content produced by our editorial team is objective, factual and uninfluenced through our sponsors. We’re honest 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 through you clicking certain hyperlinks on our site. Therefore, this compensation may impact how, where and in what order items are listed in the event that they are not permitted by law for our mortgage, home equity and other products for home loans. Other factors, like our own proprietary website rules and whether a product is available within your area or at your personal credit score could also affect how and where products appear on this site. Although we try to offer 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 was a continued exploration of the “new normal” after the pandemic, fear of the looming and the increase in household debt. Most notably, auto loan debt hit $1.52 billion, which makes up for more than 9 percent of household debt. Additionally, the debt has risen to near pre-pandemic levels according to third quarter report, with delinquencies of 60 days for new automobile loans sitting at 0.48 percent and for used car loans with 1.17 percent. An unfortunate mix of factors has created this increase on automobile loan debt. One of them is supply chain issues leaving the market with record prices for cars. Another is the general risk for borrowers. This is particularly the case for those the highest risk of being in debt or failing to make a payment. Debt and delinquency statistics All-around loan balances increased by 7.6 percent during the 3rd quarter in 2022. The total across the United States average is $5210. Since the start of 2022 it has increased the rate has increased by 1.77 percentage points for a 60 month new automobile loan as well as 1.78 percentage points for a used 48-month car loan. A loan that is 30 days delinquent increased up to 2.19 percent in the third quarter of 2022, compared to 1.66 percentage in 2021. The percentage of loans that are 60 days past due have increased to 0.81 per cent in the 3rd quarter of 2022 compared with 0.55 per cent in 2021. The average male has 16.3 percent than women. The total amount of car loan and lease total was 1.43 trillion in 2021 as compared to 1.6 trillion for student loans.
The scarcity of cars has led to higher prices. The main reason for the rise in the amount of auto loan debt in recent times has been the fewer vehicles available, explains Bankrate chief financial analyst Greg McBride, CFA. “The shortage of new cars resulted in a shortage, which pushed prices up and bled over into used vehicles when more car buyers shifted toward this direction,” McBride says. While this trend has been building, “there was an explosion in prices paid and loan balances that were financed after the pandemic struck.” McBride furthers this point by explaining that there’s no more awe-inspiring spot to see families that are living paycheck to paycheck than in their driveways. Drivers have been met with the cost of vehicles to be a result of problems with supply chains, which resulted in high-cost payments that are a burden on the budget. The impact of the economy on the state of the economy directly impacts the capacity to buy, finance and repay new or used vehicles in terms of costs and interest rates available. And with the majority of economic experts saying that the recession will continue to expand over the next 12-18 months, is just one of the expenses that will cost more. However, even if people are able to finance a vehicle upfront due to the high interest rates, delinquency and credit card debt a probable possibility for many people who borrow. Simply, as the economy is struggling with high inflation rates and rising interest rates, the government has been trying to stop the problem by raising the benchmark rate. The benchmark rate, increased to 4.25-4.5 percent in December. This rate informs how much banks are able to charge for lending funds to banks that do not have a bank, which will affect the interest rates of consumer goods, such as car loans. Even as relief came with the help of car price reductions, higher rates may increase the number of people falling behind on payments and into debt. There’s a tense distinction between less expensive vehicles . However, as is shared optimistically in the article, serious automobile loan delinquency rates are expected to decrease modestly to 1.9 percent in 2023 from 1.95 percent in 2022. On average drivers paid an average of $700 a month to purchase a brand-new car or $525 for a month in this third quarter, 2022. The consumer price index sits at 298.1 in mid-December, an increase from 278.9 last year. The average term used by subprime borrowers financing new cars was 74.25 during the 3rd quarter in 2022. The average interest rate for brand new vehicles during the 3rd quarter in 2022 was 5.16 percent, and 9.34 percent for used vehicles. There’s an 85% chance of a recession by mid-2024 according to an .
How to exit debt While incurred debt can seem impossible to escape, there is concrete you can take to get out of the hole that late or missed payments have created. Americans were in debt on average of $96,371 in 2021 -If you’ve fallen into deep debt it’s not an isolated situation. Use these suggestions when trying to get out of the burden of debt. Look into debt consolidation. An consolidating debt loan is a type of your debt. By using it, you will save on interest and help you repay the debt more quickly. To find the best debt consolidation loan there are a few options. Like with every loan, apply for preapproval before you can lock in the most favorable rate. Reassess your budget If you owe more than what’s to pay in your bank account it might be the perfect time to . In order to adjust your spending first, take the time to look at what you spend and what you’re spending it on. Look for common-cost items you could eliminate or cut down. Any extra cash that comes up could be used to pay off your credit card. You can request a loan modification if you’re in danger of becoming behind on your auto loan It is a means to modify the terms of your current loan to suit your financial circumstances. In contrast to the previous method, this one involves the current lender and will directly change your loan conditions. Be aware that not every lender will be willing to modify the terms of a loan, and you may have to prove your financial hardship.
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ways and pitfalls of taking out loans to purchase cars. 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 by providing clear, well-researched information that break down complex topics into manageable bites.
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