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 financial tools, publishing original and objective content, by enabling users to conduct research and compare information for free – so that you can make sound 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 Earn Money The offers that appear on this site come from companies that 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 loans, mortgages,, 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 include the universe of companies or financial offerings that could be open to you. Jackal Pan/Getty Images
3 min 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 to navigate the details of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain the confidence to control their finances with concise, well-researched and well-written information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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They ensure that what we write will ensure that our content is reliable, honest and trustworthy. The loans journalists and editors are focused on the things that consumers care about most — the various kinds of lending options as well as the best rates, the top lenders, how to pay off debt and much more. So you’ll be able to feel secure when investing your money. Integrity of the editing
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your money for more than four decades. We strive to continuously provide our readers with the professional advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors, reporters and editors produce honest and reliable information to assist you in making the right financial choices. The content created by our editorial team is objective, factual and uninfluenced through our sponsors. We’re open about the ways we’re capable of bringing high-quality information, competitive rates and helpful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services or through you clicking certain links posted on our site. So, this compensation can impact how, where and when products appear in listing categories and categories, unless it is prohibited by law. We also offer mortgage, home equity and other home loan products. Other factors, like our own rules for our website and whether the product is offered in your region or within your own personal credit score may also influence the manner in which products appear on this site. Although we try to offer a wide range offers, Bankrate does not include information about every financial or credit product or service. Third quarter 2022 was an investigation into what is known as the “new normal” in the wake of the pandemic. worry about the imminent threat and an increase in household debt. Most notably, the auto loan debt reached $1.52 billion. That makes over 9 percent of the household debt. In addition, it has increased to levels that are close to pre-pandemic in the third quarter of the report, with 60-day delinquencies for new car loans being 0.48 percent, and used car loans in the range of 1.17 percent. A plethora of unlucky causes has led to this increase in auto loan debt. One reason is the supply chain issues that have led to the market with record prices for cars. Second are across the board for borrowers. This is especially true for those with the highest risk of being late or not making payments. Debt and delinquency statistics Overall loan balances increased by 7.6 percent during the third quarter of 2022. The average across the nation is $5,210. Since the start of 2022, by 1.77 percentage point for a 60-month new vehicle loan or 1.78 percentage points for a 48-month used car loan. A loan that is 30 days late increased to 2.19 percentage in the 3rd quarter of 2022 as compared to 1.66 percentage in 2021. The percentage of loans that are 60 days late have risen by 0.81 percentage in 2022’s third quarter compared with 0.55 per cent in 2021. The average male has 16.3 percent than women. Total car loan and lease total was 1.43 trillion as of 2021, compared with 1.6 trillion in student loans.
A shortage of vehicles has driven prices up. One cause of the increase in the amount of auto loan debt in recent years has been fewer cars that are available, according to Bankrate’s chief financial analyst Greg McBride, CFA. “The lack of new cars caused a shortage that drove prices up and led to the sale of used cars since more buyers moved in that direction,” McBride says. As the trend is growing, “there was an explosion in the amount of money paid and loan balances that were financed after the pandemic hit.” McBride furthers this point by explaining that there is no better spot to see families that are living paycheck to paycheck than in their driveways. Drivers have been confronted with high vehicle prices due to problems with supply chains, which resulted in the need for budget-busting payment. What affects the economy on the state of the economy directly affects drivers’ ability to purchase, finance and pay off used or new cars in terms of costs and interest rates available. And with the majority of economic experts predicting that recession will continue to grow in the next 12 to 18 months, it’s just one expense that will cost more. However, even if people are able to finance a vehicle upfront however, the high interest rates make debt and delinquency a possible truth for many borrowers. In essence, as the economy grapples with steep inflation rates, the has been working to quell the issue by raising the rate of reference. The benchmark rate is increased to 4.25-4.5 percent during December. This rate reveals how much banks can charge to lend cash to different banks, which then affects interest rates for consumer goods like automobile loans. Although relief was offered in the form of vehicle prices declining, high rates could increase the number of individuals falling behind on payment and falling in debt. There’s a tense distinction between less expensive vehicles . However, as is shared optimistically in the article, serious auto loan late fees are predicted to modestly decline to 1.9 percent in 2023 , down from 1.95 percent in 2022. Averagely, drivers pay the equivalent of $750 a month for a brand new car, or $525 for a month in the 3rd quarter in 2022. The consumer price index sits at 298.1 in mid-December, up from 278.9 one year ago. The average term used by subprime borrowers financing new cars was 74.25 in the third quarter of 2022. The average interest rate for new vehicles in the third quarter of 2022 was 5.16 percent, and 9.34 percent for used vehicles. There’s a 65 percent risk of a recession before the middle of 2024, according to a .
How to get out of the debt. While debt that has been incurred may appear impossible, there’s still ways to escape the hole that late or missed payments have created. Americans were in debt on average of $96,371 by 2021- so if you have been in deep debt there’s no reason to feel alone. Use these suggestions in your quest to overcome the burden of debt. Consider debt consolidation An debt consolidation loan is a form of your debt. With it, you can lower your interest costs and assist to pay off the debt more quickly. To find the best debt consolidation loan there are a few options. Like with every loan one should seek preapproval to lock in the best rate possible. Reassess your budget If you have more debt than what’s on your bank account it might be a good time to . To adjust your spending begin by taking a look at how much you spend and what are you spending your cash on. Try and eliminate common cost items that you can eliminate or cut back. Any extra cash that comes up could be used to pay down your debt. Request loan modification If you are in danger of becoming behind on your auto loan It is a means to modify the terms of your current loan to better suit your financial situation. In contrast to the previous method, this one is handled with you current lender and will directly change your loan conditions. Keep in mind that not all lender is willing to change the terms of a loan, and you may have to prove your hardship.
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ways and pitfalls of taking out loans to purchase a car. The article was 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 the 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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