Figures show that six million Americans are behind on their auto loan payments by at least 90 days. This delinquency is causing concerns for lenders. Researchers from the Federal Reserve Bank say that late payment levels are now at their highest since 2010, and pressure may increase for borrowers to prove their financial circumstances.Except that car loans are easier to resolve if they're not paying (repo man). But still, the sign aren't terribly good:
The car loan market is robust but recent years have seen an increasing level of delinquency in subprime loans. As a result, there is a mounting worry, because similar trends in behavior occurred in the lead-up to the financial crisis in 2008.
Nearly 1 out of 3 car shoppers have negative equity on their trade-ins when they’re purchasing their next vehicle, according to Edmunds.com.Which means that if they want to trade in, they have to come up with five grand, cash, to pay off the loan.
Edmunds’ data shows that an estimated 32 percent of all trade-ins toward the purchase of a new car through the first three quarters of 2016 were underwater.
It’s the highest rate on record, and it’s up from 30 percent of all trade-ins toward new car purchases from January to September last year.
These “upside down” shoppers had an average of $4,832 of negative equity at the time of trade-in — also a record.
The better choice is to not go the consumerist route and keep the car/truck/SUV until the wheels are about to fall off. A paid-off car costs you gas, insurance and, if you're smart, preventive maintenance.
Well, no worries. Trump's such a good negotiator, he'll Twitterize this problem in nothing flat.