Information for chart from: YCharts.
Today, I’m going to discuss how vehicle loans have hit record highs.
Record Amounts
Today, the average car loan is currently around $30K. This in turn results in a $500/month payment over 68 months according to CNBC. Car buyers are opting for an extended period of time to pay off their loans to lower their monthly payments.
According to The Federal Reserve Bank of New York , 107 million people currently have car loans. There are more vehicle loans than mortgages. Overall, between purchasing higher priced cars and taking longer loans on them, the overall amount of debt has increased.
What is Happening?
Six million people are at least 90 days in arrears on these car loans. Car buyers think they are getting a great deal by buying a more expensive car with lower monthly payments; however, they are paying more interest overall.
If one’s credit rate is not the best, he or she can get a “sub-prime” loan which means there will be a higher interest rate charged. This may not end well for the owner because he or she may not be able to continue to pay these extremely high rates over the years according to CNN Money. Click Here to further your knowledge about the debt due from car loans.
Top 3 Tips
- Be careful when signing up for a vehicle loan.
- Examine the contract for the auto loan closely.
- Pay attention to the total loan cost or you may end up owing more on the loan than the vehicle is worth.