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 choices by offering you interactive tools and financial calculators as well as publishing quality and impartial content. We also allow you to conduct your own research and compare information at no cost and help you make informed financial decisions. Bankrate has agreements with issuers such as, but not limited 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 that compensate us. This compensation may impact how and where products appear on the site, such as such things as the order in which they appear within the listing categories in the event that they are not permitted by law for our mortgage, home equity and other home lending products. However, this compensation will have no impact on the content we publish or the reviews appear on this website. We do not cover the entire universe of businesses or financial offerings that could be open to you. Jackal Pan/Getty Images
3 min read Published December 19, 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of borrowing money to purchase cars. Written 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 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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There are money-related questions. Bankrate has the answers. Our experts have helped you understand your finances for more than four decades. We continually strive to give our customers the right advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to strict standards standard of conduct, so you can rest assured that our content is truthful and reliable. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the right financial decisions. The content we create 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 useful tools for you by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and, services, or by you clicking on certain hyperlinks on our site. This compensation could 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 or home equity products, as well as other products for home loans. Other factors, like our own proprietary website rules and whether or not a product is offered in your area or at your own personal credit score may also influence the manner in which products appear on this site. We strive to provide the most diverse selection of products, Bankrate does not include information about every financial or credit product or service. The third quarter of 2022 brought an ongoing exploration into the “new normal” in the wake of the pandemic. worry about the imminent threat and an increase in debt for households. The most notable is that auto loan debt reached $1.52 billion. That makes up for more than 9 percent of household debt. On top of that, to near pre-pandemic levels as per the third quarter report, with delinquencies of 60 days for new vehicle loans sitting at 0.48 percent and for used car loans at 1.17 percent. A plethora of unlucky causes has led to this increase of automobile loan debt. One of them is supply chain issues leaving the market with record prices for cars. Second are across the board for borrowers. This is particularly relevant for those more of a chance of being in debt or failing to make a payment. Debt and delinquency statistics Overall loan balances increased by 7.6 percent during the quarter that ended in the middle of the year 2022. The total across the United States is $5,210. Since 2022’s beginning, in the year 2022, it has increased 1.77 percent for a 60-month new car loan and 1.78 percentage points to get a 48-month used car loan. Loans that are 30 days delinquent increased up to 2.19 percentage in the 3rd quarter of 2022, compared the 1.66 percentage in 2021. A loan that is 60 days delinquent have increased to 0.81 percent in the third quarter of 2022 as compared the 0.55 percentage in 2021. Men have 16.3 percent than women. The total amount of auto loan and lease value was 1.43 trillion by 2021 as compared to 1.6 trillion in student loans.
A shortage of vehicles has led to higher prices. One reason for the growth in auto loan debt over the recent times has been the fewer vehicles available, explains Bankrate’s CFA Greg McBride, CFA. “The shortage of new vehicles created a scarcity that pushed prices up, and this was reflected in used cars when more car buyers shifted toward this the direction of buying,” McBride says. And while the trend is growing, “there was an explosion in the amount of money paid and loan balances financed once the pandemic hit.” McBride furthers this point by explaining that there’s no more awe-inspiring spot to see families living paycheck-to-paycheck than in the driveway. Drivers have faced pricey vehicles due to 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 cost and available interest rates. In addition, with the majority of economic experts predicting that recession will continue to grow over the next 12 to 18 months, is just one of the expenses that will cost more. Even if drivers are able afford to purchase a car upfront, the high-interest rates make debt and delinquency a possible possibility for many borrowers. In essence, as the economy is struggling with high inflation rates, the has been working to curb the issue by increasing the rate of reference. The benchmark rate was increased to 4.25-4.5 percent during December. This rate determines the amount banks can charge to lend money to other banks. This will affect the interest rates of consumer goods like automobile loans. While relief did come with the help of car price reductions, higher rates could increase the number of individuals falling behind on payment and falling into debt. There’s a conflicting perception between less expensive vehicles . However, as is shared optimistically in the article, serious auto loan late fees are predicted to decrease modestly to 1.9 percent in 2023 , down from 1.95 per cent in 2022. Averagely, drivers pay an average of $700 monthly to purchase a brand-new car or $525 for a month for a used car as of this third quarter, 2022. The index of consumer prices 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 was 74.25 during the 3rd quarter in 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 the risk of 65 percent of a recession by mid-2024 according to an .
How to get out of debt While incurred debt can appear impossible, there’s still steps you can take to get out of the hole that missed or late payments have caused. Americans were in debt on average of $96,371 by 2021- so if you have experienced a debt crisis it’s not an isolated situation. Use these suggestions when trying to remove yourself from the burden of debt. Think about debt consolidation. An credit consolidation loan is a way to pay off your debt. It can help you reduce the cost of interest and help to pay off debt at a faster rate. To find the ideal debt consolidation loan you can look through a variety of offers. Like any loan, apply for preapproval to lock in the most favorable rate. Check your budget. If you have more debt than what you have in your bank account it might be the perfect time to . To alter the amount you spend begin by taking a look at how much you’re spending and the things you’re spending it on. Make sure to eliminate the common items that you can remove or cut back. Any extra money that is piled up can be used to repay your debt. Request loan modification if you’re in danger of being late in your car loan This is a method to change the terms of your current loan to better suit your financial circumstances. Different from , this process involves you current lender and will alter the loan terms. Keep in mind that not all lender will be willing to change the terms of an loan, and you may have to prove your hardship.
The article was 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 taking out loans to purchase cars. 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 the confidence to control their finances with concise, well-researched and well-researched content that dissects complicated subjects into bite-sized pieces.
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