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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 smarter financial decisions by offering interactive financial calculators and tools that provide original and objective content. This allows users to conduct research and compare data for free and help you make sound 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 Make Money The deals that are displayed on this website are provided by companies that compensate us. This compensation can affect the way and where products are displayed on this website, for example for instance, the sequence in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our loans, mortgages,, and other products for home loans. But this compensation does affect the information we provide, or the reviews that 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 on December 19, 2022.

Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ins and outs of securely taking out loans to buy an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to control their finances through providing concise, well-researched and well-written information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate guarantee

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We make sure that everything we publish will ensure that our content is reliable, honest and trustworthy. We have loans reporters and editors are focused on the points consumers care about the most — the different types of lending options, the best rates, the most reliable lenders, how to pay off debt and more — so you’ll be able to feel secure when investing your money. Integrity of the editing

Bankrate follows a strict , so you can trust that we put your interests first. Our award-winning editors and reporters provide honest and trustworthy information to help you make the right financial choices. Our main principles are that we respect your confidence. Our goal is to offer readers reliable and honest information. We have established editorial standards to ensure that this happens. Our editors and reporters thoroughly check the accuracy of editorial content to ensure the information you’re receiving is true. We have a strict separation between our advertisers and our editorial team. Our editorial team doesn’t receive any direct payment through our sponsors. Editorial Independence Bankrate’s team of editors writes for YOU – the reader. Our aim is to provide you the best advice that will aid you in making informed financial decisions for your personal finances. We follow strict guidelines in order to make sure that the content we publish is not in any way influenced by advertising. Our editorial team receives no any compensation directly from advertisers and our content is fact-checked to ensure accuracy. Therefore, whether you’re reading an article or a review it is safe to know that you’re getting credible and dependable information. What we do to earn money

There are money-related questions. Bankrate has answers. Our experts have helped you understand your money for more than four decades. We are constantly striving to provide consumers with the expert guidance and the tools necessary to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is honest and accurate. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the right financial choices. The content we create by our editorial staff is objective, truthful and is not influenced by our advertisers. We’re open about how we are in a position to provide quality information, 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 placement of sponsored products and services or when you click on specific links on our website. Therefore, this compensation may influence the manner, place and in what order items are listed, except where prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, such as our own website rules and whether or not a product is available in your region or within your own personal credit score could also affect how and where products appear on this website. We strive to provide a wide range offers, Bankrate does not include information about every credit or financial product or service. The third quarter of 2022 saw an exploration of”the “new normal” after the pandemic, anxiety about the threat of a new outbreak, and a rise in household debt. Particularly, automobile loan debt climbed to $1.52 billion, which is over 9 percent of all household debt. Additionally, the debt has risen to levels that are close to pre-pandemic as per the third quarter report, with 60-day delinquencies for new vehicle loans being 0.48 percent, and used automobile loans at 1.17 percent. An unfortunate mixture of factors have led to this rise of auto loan debt. One of them is supply chain issues leaving record-high prices for vehicles. The other is that there are a variety of issues for those who borrow. This is especially the case for those who hold a higher likelihood of being late or not making a payment. Debt and delinquency statistics Overall loan balances increased 7.6 percent in the 3rd quarter in 2022. The total across the United States is $5,210. Since the beginning of 2022 the rate has increased the rate has increased by 1.77 percent for a 60-month new automobile loan and 1.78 percentage points to get a 48-month used car loan. The amount of loans that are 30 days late increased up to 2.19 per cent in 2022’s third quarter, compared with 1.66 per cent in 2021. A loan that is 60 days past due have increased by 0.81 percentage in 2022’s third quarter compared to 0.55 percent in 2021. Men have 16.3 percent more than women. The total amount of automobile loan and lease was 1.43 trillion in 2021 compared with 1.6 trillion of student loans.

A shortage of vehicles has pushed prices higher One reason for the growth in auto loan debt in recent times has been the fewer vehicles on the market, says Bankrate’s Chief Financial Analyst Greg McBride, CFA. “The lack of new cars caused a shortage that drove prices higher, and this was reflected in used cars since more buyers moved toward this direction,” McBride says. While this trend is gaining momentum, “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 location to observe families living paycheck to paycheck than in the driveway. Drivers have been confronted with high vehicle prices 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 amount of debt economy directly affects drivers’ capacity to buy, finance and repay used or new cars in terms of cost and available interest rates. With the majority of economic experts saying that the recession will continue to grow over the next 12 to 18 months, this is only one cost that will be more. But even if drivers can to finance a vehicle upfront, the high-interest rates make delinquency and credit card debt a probable possibility for many borrowers. Simplyput, as the country grapples with steep inflation rates, the has been working to curb the issue by raising the rate of reference. The benchmark rate was has been set at 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 can affect interest rates for consumer products, like car loans. While relief did come in the form of vehicle prices declining, high rates could increase the number of people who are in debt payment and falling entering debt. There’s a conflicting perception between less expensive vehicles . But as optimistically shared in , serious automobile loan default rates are anticipated to decrease modestly to 1.9 percent in 2023 , down from 1.95 percentage in 2022. The average cost for drivers was the equivalent of $750 monthly to purchase a brand-new car or $525 for a month for a used car as of the 3rd quarter in 2022. The consumer price index was at 298.1 in mid-December, up from 278.9 one year ago. The average term for subprime borrowers who finance new cars was 74.25 for the quarter ending March 31, 2022. The average interest rate for new cars during the 3rd quarter in 2022 was 5.16 percent and 9.34 percent for used. There’s an 85% chance of a recession by mid-2024 according to the .

How to exit the debt. While debt that has been incurred may feel inescapable there are still steps you can take to escape the hole that late or missed payments have caused. Americans were in debt on average of $96,371 as of 2021- so if you have fallen into deep debt, you aren’t alone. Take note of these tips in your quest to overcome debt. Look into debt consolidation. A debt consolidation loan is a way to pay off your debt. By using it, you will lower your interest costs and assist you repay debt at a faster rate. To locate the most effective debt consolidation loan there are a few options. Like with every loan you should apply for preapproval before you can lock in the best rate possible. Reassess your budget If you have more debt than you have on the bank account it might be a good time to . To adjust your spending, start by taking an inventory of how much you’re spending and the things are you spending your cash on. Try and eliminate common cost items you could eliminate or cut down. Any extra money that is piled up could be used to pay off your credit card. You can request a loan modification If you are at risk of falling behind on your auto loan It is a means to change the terms of your current loan to suit your financial circumstances. This process is different from the other one. It involves your current lender and will directly change your loan conditions. Remember that not all lender is willing to change the terms of an loan and you may need to provide proof of your financial hardship.

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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls 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 passionate about helping readers gain confidence to manage their finances through providing clear, well-researched information that dissects complicated topics into digestible pieces.

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