After all supply chain limit Over the past few years, the supply of new and used cars at dealers has gradually stabilized. The price is also report leveled off, but, now, people are struggling to get by car loan in the wake of historical past due debt And default rateEQUAL America today report.
delinquency rate ABOVE Auto loan is reaching a record high: in May 2023, the number of seriously delinquent loans was equal to that of 2006, when Cox Automotive first started tracking these. You will notice that it is the period of the middle aughts Depression. A loan is considered severely delinquent after being overdue for more than 60 days, while defaults apply for more than 90 days, each America today.
And the default rate is also higher than in previous years, matching that of 2019 — just before the global pandemic began. Clearly, something is amiss among buyers who keep being two or three months behind on payments.
That may have to do with the monthly cost of auto loans, which are also now higher than ever. The number of Americans paying more than $1,000 a month for their cars increased by more than 17% by the end of this summer. And as the credit balance of U.S. buyers grows, so does the risk of defaulting loans, at least according to lenders.
The result of all this is famous banks and banks like Fifth Third Bancorp, US. Bank, Citizens Financial and Capital One, are turning away buyers and denying loan applications, according to America today and federal:
The Federal Reserve said rejection rate because Auto loan in June rose to 14.2% from 9.1% in February, the last time the survey was conducted. That is the highest level since this data was first collected in 2013 and exceeded the application rate for the first time.
The Fed said the average reported probability that an auto loan application will be rejected increased sharply to 30.7%, the highest level since the Fed began collecting this data in 2013.
For the first time ever, nearly a third of car buyers in the US are likely to have their applications rejected at a dealership’s finance department once they’re approved.
The report concludes with advice for car buyers, who have been told they should “come to the negotiating table” with a budget that takes into account their interest rates as well as their monthly payments. Interest rates have increased recently, meaning many drivers may want to extend the loan term to reduce their monthly payments, but experts warn against doing so due to the risk of falling into a negative equity trap. Experts also recommend buying a “less expensive car,” which seems a bit out of place, since cars don’t have to be luxury to be expensive.
Photo: Bridget Bennett (beautiful pictures)
