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 smarter financial decisions by offering interactive financial calculators and financial tools that provide original and objective content. This allows you to conduct research and compare information for free – so that you can make sound financial decisions. Bankrate has partnerships with issuers including, 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 are from companies that compensate us. This compensation can affect the way and where products are displayed on this site, including, for example, the order in which they appear within the listing categories in the event that they are not permitted by law for our loans, mortgages,, and other home loan products. This compensation, however, does affect the content we publish or the reviews you read on this site. We do not cover the entire universe of businesses or financial offers that may 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 in navigating the details of borrowing money to buy a car. Edited 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 manage 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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At Bankrate we aim to help you make smarter financial decisions. We adhere to the highest standards of editorial integrity ,
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They ensure that what we write ensures that everything we publish is accurate, objective and trustworthy. The loans reporters and editors are focused on the points consumers care about the most — different types of lending options and the most competitive rates, the top lenders, the best ways to repay debt and more — so you can feel confident when investing your money. Editorial integrity
Bankrate adheres to a strict code of conduct standard of conduct, which means you can be confident that we’re putting your interests first. Our award-winning editors and reporters produce honest and reliable content to aid you in making the best financial decisions. Our main principles are that we respect your confidence. Our goal is to offer readers truthful and impartial information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly check the accuracy of editorial content to ensure that the information you’re reading is accurate. We keep a barrier with our advertising partners and the editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly through our sponsors. Editorial Independence Bankrate’s team of editors writes for YOU the reader. Our goal is to give you the most accurate advice to assist you in making smart financial decisions for your personal finances. We follow strict guidelines in order to make sure that the content we publish isn’t in any way influenced by advertising. Our editorial staff receives no any compensation directly from advertisers and all of our content is checked for accuracy to ensure its truthfulness. Therefore whether you’re reading an article or reviewing it is safe to know that you’re getting credible and reliable information. How we earn money
If you have questions about money. Bankrate can help. Our experts have been helping you master your finances for more than four decades. We strive to continuously give our customers the right guidance and the tools necessary to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and reliable. Our award-winning editors and journalists create honest and accurate content that will help you make the right financial choices. The content we create by our editorial staff is factual, objective and is not influenced by our advertisers. We’re transparent about the ways we’re capable of bringing high-quality content, competitive rates, and useful tools for you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and services, or by you clicking on certain hyperlinks on our website. This compensation could influence the manner, place and in what order products appear within listing categories in the event that they are not permitted by law. This is the case for our mortgage or home equity products, as well as other home lending products. Other elements, like our own rules for our website and whether the product is offered in your area or at your personal credit score may also influence the manner in which products appear on this site. We strive to provide a wide range offers, Bankrate does not include the details of every financial or credit product or service. In the third quarter in 2022, we saw a continued investigation of the “new normal” following the pandemic, worry about the imminent threat and the increase in household debt. The most notable is that auto loan debt hit $1.52 billion. This accounts for more than 9 percent of the household debt. On top of that, to near pre-pandemic levels as per the third quarter report, with 60-day delinquencies for new car loans sitting at 0.48 percent, and used car loans at 1.17 percent. An unfortunate mixture of factors has created this increase in the amount of auto loan debt. One of them is supply chain issues leaving the market with record prices for cars. Second are across the board for those who borrow. This is especially the case for those 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 quarter that ended in the middle of the year 2022. The total across the United States is $5,210. Since the start of 2022 it has increased in the year 2022, it has increased 1.77 percentage point for a 60-month brand new vehicle loan as well as 1.78 percentage points for a used 48-month car loan. The amount of loans that are 30 days past due increased up to 2.19 per cent in 2022’s third quarter as compared the 1.66 percentage in 2021. Loans that are 60 days delinquent have increased by 0.81 percent in the third quarter of 2022 compared to 0.55 percent in 2021. Men have 16.3 percent more than women. The total amount of automobile loan and lease value was 1.43 trillion in 2021 as compared the 1.6 trillion for student loans.
A shortage of vehicles has led to higher prices. The main reason for the rise in the amount of auto loan debt over the last few years is the lack of cars on the market, says Bankrate’s Chief Financial Analyst Greg McBride, CFA. “The shortage of new vehicles created a scarcity that pushed prices higher, and this led to the sale of used cars when more car buyers shifted toward this trend,” McBride says. While this trend is gaining momentum, “there was an explosion in prices paid and loan balances that were financed when the pandemic hit.” McBride furthers this argument by saying that there’s no better place to see households that are living paycheck to paycheck than in the driveway. Drivers have been met with high vehicle prices due to problems with supply chains, which is causing the need for budget-busting payment. The impact of the economy on the state of the economy directly impacts drivers’ ability to finance, purchase and repay used or new cars with regard to cost and available interest rates. In addition, with 43 percent of economists saying that recession will continue to increase over the next 12 to 18 months, this is only one cost that will be more. However, even if people are able afford to purchase a car upfront, the high-interest rates make the possibility of delinquency and debt a reality for a lot of people who borrow. Simply, as the economy is struggling with high inflation rates The government has been working to stop the problem by raising the benchmark rate. The benchmark rate, has been set at 4.25-4.5 percent in December. This rate reveals how much banks are able to charge for lending cash to different banks. This then affects interest rates for consumer goods, such as car loans. While relief did come with the help of car prices declining, high rates could increase the number of people falling behind on repayments and slipping entering debt. There is a challenging dichotomy between vehicles that are less expensive . However, as is shared optimistically in the report, serious automobile loan delinquency rates are predicted to moderately decrease to 1.9 percent in 2023 from 1.95 per cent in 2022. The average cost for drivers was about $700 monthly for a brand new car, as well as $525 monthly for a used car as of the 3rd quarter in 2022. The consumer price index was at 298.1 at the mid-December timeframe, which is up from 278.9 one year ago. The average loan term for subprime lenders financing new vehicles is 74.25 during the 3rd quarter in 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 vehicles. There is the risk of 65 percent of a recession before the middle of 2024, according to the .
How to exit debt Although debt may appear impossible, there’s still ways to escape the hole that late or missed payments have caused. Americans were in debt on average of $96,371 by 2021If you’ve experienced a debt crisis there’s no reason to feel alone. Use these suggestions when trying to remove yourself from the burden of debt. Think about debt consolidation. An credit consolidation loan is a type of your debt. By using it, you will reduce the cost of interest and help you repay debt at a faster rate. To find the best debt consolidation loan there are a few options. As with any loan, apply for preapproval to lock in the most favorable rate. Check your budget. If you have more debt than what you have on the bank account it might be a good time to . To adjust the amount you spend begin by taking a look at how much you spend and what are you spending your cash on. Make sure to eliminate the common items you could eliminate or cut down. Any extra cash that comes up could be used to pay off your debt. Make a request for loan modification If you are in danger of being late on your auto loan, is a way to alter your current loan to suit your financial circumstances. This process is different from the other one. It involves the present lender and will alter the loan terms. Keep in mind that not every lender is willing to change the terms of a loan and you may require proof of 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 has a specialization in helping readers with the details of borrowing money to purchase 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 confidence to take control of their finances with precise, well-studied information that break down complicated topics into digestible pieces.
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