Seven Million Americans Delinquent on Auto Loans Could Be a Bad Sign
- February 14, 2019
Featuring Jeremy Lark, Senior Manager of Client Services
The U.S. is at an all-time high for auto loan delinquencies. Is this the sign of overborrowing or overconfidence in the economy’s strength?
- Seven million people are at least 90 days behind in their car payments, according to a report from the Federal Reserve Bank of New York.
- Longer auto-loan periods and increased average loan amounts may be another indication that people are overstretched, despite sunny reports about the economy.
- Total auto debt in the U.S. today exceeds $1 trillion, the Federal Reserve said.
Think about the impressive number that is $1.3 trillion. That’s the total amount of auto-loan debt in the United States today, representing a $584 billion increase over the level in 2010. Break that down consumer by consumer, and it’s a bit alarming to learn that, according to a Federal Reserve report, some seven million American consumers are 90 days or more behind on their auto loan payments and potentially facing repossession.
“Longer loan periods typically result in higher interest being paid over the life of the loan,” said Jeremy Lark, senior manager of client services at GreenPath Financial Wellness, a nonprofit credit-counseling agency headquartered in Farmington Hills, Michigan. “This could result in the consumer being ‘upside down’ on the vehicle, in other words, he/she owes more on the loan than the vehicle is worth. Longer loan periods may limit the consumer’s ability to upgrade their vehicle or become problematic if the vehicle breaks down or becomes unreliable.”
“Some lenders can initiate repossession proceedings after a single default on the loan,” Lark said. “Consumers should understand the terms of the loan, work with their lenders and seek out any help or assistance available to them.”
Continue here to read the entire Car and Driver article.
We Can Help You Navigate Your Auto-Loans
GreenPath offers free financial counseling and education to support people in paying off their auto loan debt. Our professional, caring coaches will explain your options, including paying off your debt on your own or using a Debt Management Plan. They’ll support you to develop a personal action plan that works for you.