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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 decisions by offering interactive financial calculators and tools that provide original and objective content. We also allow you to conduct research and compare data for free to help you make informed financial decisions. 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 deals that are displayed on this site are from companies that pay us. This compensation can affect the way and where products are displayed on this site, including for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law for our loan products, such as mortgages and home equity and other products for home loans. However, this compensation will not influence the content we publish or the reviews appear on this website. We do not include 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
Authored by 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 buy an automobile. Edited 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 confidence to take control of their finances through providing clear, well-researched information that breaks down complex topics into manageable bites. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have been helping you master your money for over four years. We strive to continuously provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct 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 that will help you make the right financial decisions. Our content produced by our editorial staff is factual, objective and is not influenced from our advertising. We’re open about how we are capable of bringing high-quality content, competitive rates, and useful tools for 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 certain links posted on our website. So, this compensation can influence the manner, place and when products appear within listing categories and categories, unless it is prohibited by law. We also offer mortgage or home equity products, as well as other products for home loans. Other factors, such as our own rules for our website and whether the product is available within your area or at your own personal credit score can also impact how and where products appear on this website. Although we try to offer the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. In the third quarter in 2022, we brought an examination about what is known as the “new normal” following the pandemic, worry about the imminent threat and the increase in debt for households. Particularly, the auto loan debt reached $1.52 billion. That accounts for over 9 percent of the household debt. On top of that, to levels that are close to pre-pandemic as per the third quarter report, 60-day delinquencies for new car loans in the range of 0.48 percent, and used automobile loans with 1.17 percent. A plethora of unlucky causes has led to this increase in auto loan debt. One is remaining supply chain issues that have led to record-high vehicle prices. Another is the general risk for those who borrow. This is particularly true for those with more of a chance of being in debt or failing to make a payment. Debt and delinquency statistics Overall loan balances grew 7.6 percent in the 3rd quarter in 2022. The total across the United States average is $5210. Since the beginning of 2022 it has increased in the year 2022, it has increased 1.77 percentage points for a 60-month new vehicle loan and 1.78 percent points on a used 48-month car loan. Loans that are 30 days delinquent increased by 2.19 per cent in 2022’s third quarter as compared with 1.66 per cent in 2021. Loans that are 60 days late have risen 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 automobile loan and lease total was 1.43 trillion in 2021 as compared with 1.6 trillion for student loans.
A scarcity of vehicles has pushed prices higher One reason for the growth in auto loan debt over the last few times has been the fewer vehicles that are available, according to Bankrate’s CFA Greg McBride, CFA. “The lack of new cars created a scarcity that pushed prices up, and this was reflected in used cars as more car buyers moved in that direction,” McBride says. As 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 idea by pointing out that there’s no better spot to see families that are living paycheck to paycheck than the driveway. Drivers have faced 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 ability to purchase, finance and repay new or used cars in terms of cost and the interest rates that are available. In addition, with 43 percent of economists predicting that recession is likely to increase over the next 12-18 months, this is only one expense that will cost more. But even if drivers can borrow money to purchase a car in the first place due to the high interest rates, the possibility of delinquency and debt a reality for a lot of people who borrow. Simplyput, as the country is struggling with high inflation rates, the has been working to stop the problem by raising rates of benchmarking. The benchmark rate, has been set at 4.25-4.5 percent during December. This rate determines the amount banks can charge to lend cash to different banks. This will affect the interest rates of consumer goods, such as car loans. Even as relief came with the help of car prices decreasing, high rates can increase the amount of individuals falling behind on payment and falling in debt. There’s a tense distinction between cheaper vehicles . But as optimistically shared in the report, serious auto loan late fees are expected to decrease modestly to 1.9 percent by 2023, from 1.95 per cent in 2022. On average drivers paid an average of $700 monthly for a new car or $525 for a month as of the third quarter of 2022. The consumer price index sits at 298.1 in mid-December, up from 278.9 a year ago. The average loan term for subprime lenders who finance new cars was 74.25 in the third quarter of 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 cars. There is an 85% chance of a recession in the mid-2024 timeframe, according to an .
How to get out of the debt. While debt that has been incurred may seem impossible to escape, there is concrete you can take to get out of the hole that missed or late payments have created. Americans have an average debt of $96,371 in 2021 -therefore if you’ve experienced a debt crisis there’s no reason to feel alone. Consider the following tips to help you remove yourself from the burden of debt. Consider debt consolidation The debt consolidation loan is a way to pay off your debt. It can help you reduce the cost of interest and help you repay debt at a faster rate. To find the ideal debt consolidation loan there are a few options. Like with every loan you should apply for preapproval in order to secure the most favorable rate. Reassess your budget If you owe more than you have in your bank account it might be a good time to . In order to adjust your spending begin by taking a look at how much you’re spending and what is it that you’re investing your money on. Look for common-cost items you could eliminate or cut down. Any extra cash that comes up could be used to pay down your credit card. Make a request for loan modification if you’re in danger of becoming behind on your auto loan This is a method to change the terms of your current loan to suit your financial circumstances. Different from , this process is handled with you current lender and will directly change your loan conditions. Keep in mind that not every lender will agree to modify the terms of a loan and you might require proof of your 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 in navigating 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 from late 2021. They are committed to helping readers gain the confidence to manage their finances by providing concise, well-researched and well-researched content that breaks down otherwise complicated topics into digestible pieces.
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