Growing auto debt in the US

auto debt

What exactly is happening?

There is substantially more interest among US citizens to purchase motor vehicles than were the case a couple of years ago. This is also leading to substantially more motor vehicle debt than ever before in the history of the US. There are some economists who have compared the current booming vehicle loan industry to the mortgage industry just before the recession. Debts resulting from motor vehicle loans is now exceeding $1 trillion. The average loan amount per US citizen has also increased sharply to just below $30,000 which is a significant increase from those in previous years. Considerably more US citizens are now very interested in the motor vehicle market and many of them apply for motor vehicle loans. Because of the rising motor vehicle prices an increasing number of people will require loans to finance that purchases. One of the factors which is contributing to the increases in motor vehicle sales is the fact that gasoline prices is significantly lower and therefore people have more money to spend on the vehicle loan repayments. Apparently over 60 million new vehicles was registered in 2014.

Vehicles is more expensive

Due to increases in manufacturing process motor vehicles is now more expensive than ever before and the average price for a new vehicle is now almost $32,000 while second and motor vehicle buyers can expect to pay almost 17,000 for second hand cars. Although interest rates on things such as motor vehicle loans has increased slightly over the last year, according to economists they are still considerably lower when compared to trends over the last decade or two. The one obstacle which is still standing in the way of many people who desire to purchase motor vehicles is the fact that they do not have adequate credit scores in order to allow them to qualify for motor vehicle loans. Many will not be able to succeed without professional assistance such as could be obtained at Subprime loans is those which is awarded to US citizens who have credit ratings of 600 and below. Although it may not be impossible for such people to obtain vehicle loans the process will not be easy either. The one advantage when it comes to vehicle loans is the fact that the motor vehicle itself is seen by lenders as excellent security against a possible default.

People are more responsible financially

The current tendency among US consumers is to pay their motor vehicle loans on time and there is only a very slight increase in the amount of delinquencies. The question which every US citizen should ask is whether the current situation in the motor vehicle market will continue to remain at its current levels or whether there may be nasty surprises in store for those people who have invested in expensive motor vehicles. No one expected the recession of 2008 to have such a drastic impact upon the mortgage market but the fact remains is that the recession resulted in over 4 million foreclosures in only three years. Why is some of the top lenders in the vehicle industry already talking about the possibility of placing a dollar value cap on its subprime auto loans? What exactly could this mean to the US consumer?

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