The Federal Reserve Bank released new data in February of this year showing that more than 7 million Americans are more than 90 days past due on their auto loan payments. That is more than 1 million more delinquencies than in 2010.
Economists are questioning why Americans are having so much trouble keeping up with their auto loans at a time when unemployment is at a record low. It appears that younger Americans are struggling with auto loans the most. The data reveals delinquencies on auto loans held by borrowers under 30 have increased recently. Some speculate that student debt may play a role in that considering younger Americans, and their parents, are facing repayment of $1.5 trillion in loans for education.
According to Kelly Blue Book, in 2018 consumers paid an average of $36,000 for a new vehicle last year. This figure is up 3% over the previous year. Last year, 50% of the auto loans secured by consumers were subprime loans for consumers with credit scores below 620. The average interest rate for a subprime loan was 12.71% last year with some lenders topping out as high as 24.99%.
Economists are speculating that this is a sign of a looming recession as auto loans and housing are usually the first bills to be prioritized over all other monthly expenses.
If you are troubled by a subprime auto loan or you are fearing repossession, reach out to your Modesto bankruptcy attorney at (209) 438-4990.
Categorized in: Loans