The Federal Reserve Bank of New York’s Center for Microeconomic Data recently reported that auto loans totaled $1.27 trillion in the fourth quarter of 2018. That is up $9 billion from the third quarter of 2018 and $53 billion greater than it was during Q4 2017. In addition, it is the ninth consecutive year that auto loan debt has increased. Last year marked the highest level of originations in almost two decades at $584 billion in new auto loans. In 2017, originations were at $569 billion.
As auto loan debt has increased, so has the delinquency rate. Last quarter, 2.36% of borrowers were seriously delinquent on their payments — way up from 1.5% in 2012 and slightly up from the third quarter of 2018 (2.3%), according to the report. (“Seriously delinquent” is described as being 90 days or more behind on one’s payments.)
Data also showed that those who were younger and had less-than-perfect credit scores were more likely to be seriously delinquent. Data from Q4 2018 showed that borrowers between the ages of 18 and 29 had a higher percentage (4.0%) of being behind on their auto loan payments than other age groups. Those ages 50 to 69 had the lowest rate at 1.6%. Borrowers with credit scores below 620 had an 8.18% serious delinquency rate, while the rate for those with a 760 credit score or above was a mere 0.13%
The New York Fed also reported that over 7 million borrowers being seriously delinquent last year, compared to 6 million in 2010 during the recession. The report goes on to state that, despite the strength of the U.S. economy, more people are experiencing difficulty with car loan debt.
Joelle Scally, the administrator of the New York Fed’s Center for Microeconomic Data, said that, although more loans went to those with outstanding credit and fewer loans went to those with less-than-perfect credit, those subprime borrowers were more likely to become seriously delinquent. She also stated that there was a greater probability that younger borrowers would default on their auto loans.
Individuals facing the burden of auto loan debt may feel overwhelmed and may face difficulties trying to find the debt relief option that is in the best interest of them and their loved ones. Robert Jacovetti of Jacovetti Law, P.C. is experienced in representing individuals in consumer protection matters, including resolving auto loan debt. Our debt relief lawyers will work with clients to assess their debt situations and advise them on the best path to financial stability. For more information or to schedule a consultation, you can call (516) 217-4488 or schedule an appointment in our Mineola office.