US Drivers Facing Record-High Rates of Late Car Loan Payments: What You Need to Know

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By georgeskef

  • US drivers have the highest rate of late car loan payments on record
  • 6.11% of subprime auto borrowers were at least 60 days past due on their loans in September, the highest since data collection began in 1994
  • With the Fed expected to keep interest rates steady or increase them, the percentage of late payments could rise even further
  • Subprime loans are given to people with credit scores between 501 and 600, with average rates of 11.75% on new cars and 18.5% on used vehicles
  • The average American spends between $500 and $700 per month on car payments
  • This trend is a stressor for Americans who rely on cars for commuting and grocery shopping, especially in cities without robust public transportation systems
  • Timing matters when buying a car, with early April to early May identified as the best time due to tax refunds and increased competition among dealerships

Bloomberg reports that US drivers are experiencing record rates of late car loan payments. As of September, 6.11% of subprime auto borrowers were at least 60 days late on their loans – the highest figure since data collection began in 1994. Unfortunately, this trend shows no signs of abating anytime soon and could increase even further should interest rates stay steady or rise as predicted by the Federal Reserve in future policy decisions.

Subprime borrowers — individuals with credit scores between 501 and 600 — tend to experience late payments more frequently, primarily affecting loans with interest rates averaging 11.75% for new vehicles and 18.5% for used ones (according to Experian). Americans typically spend between $500 and $700 monthly on car payments without factoring in insurance costs.

Late payments can be especially devastating to Americans who rely on their cars for daily transportation and grocery shopping needs, like commuters. Cities like Boston and Seattle provide alternative modes of transport like public transportation or bike-friendly streets; however, not every city provides such options; over 90% of US households own at least one vehicle, emphasizing its significance.

Margaret Rowe of Fitch Ratings noted that subprime borrowers are feeling the squeeze and act as an early indicator of macroeconomic headwinds – these headwinds have ripple effects and impact many aspects of our economy.

Time of purchase can be everything for those searching for their first car, according to The Wall Street Journal. Early April to May is often considered the ideal period, since this is when people typically receive their tax refunds and are therefore financially more capable of making such an expensive purchase. Furthermore, dealerships will compete fiercely during this period with prospective buyers receiving better deals; although with tax season still six months away it might be worthwhile considering other forms of transportation, such as walking or biking as alternative modes of transport during that period.

Conclusion In conclusion, late car loan payments among US drivers is an alarming trend, particularly among subprime borrowers with higher interest rates. Car ownership remains essential in many cities without comprehensive public transportation systems – this makes the issue all the more burdensome. With our economy still uncertain and uncertainty remaining an ever-present threat to stability it is vital that prospective car purchases be undertaken wisely considering factors like timing and financial security before making their purchase decision.