Americans Have $1.1 Trillion in Car Loan Debt, Report Says
That’s roughly 70 percent of U.S. currency in circulation.
As new car sales come off a record year in 2016, a recent reports show that Americans are further in debt than ever.
Automotive News reports that car loans have grown tremendously over the last year, putting Americans at a deficit of $1.1 trillion, or roughly 70 percent of U.S. currency in circulation today based on statistics from the Federal Reserve Bank of St. Louis.
Since the economy crashed nearly a decade ago in 2008, sub-prime auto loans have skyrocketed year-on-year. This means that more and more lenders have been approving deals at significantly higher interest rates, up to a dismal 29 percent. Because of this, creditors are earning more in interest while debtors pay less in principle by a wide margin.
At the beginning of this year, lenders began to ease up on sub-prime loans as borrowers were missing pay-by dates and defaulting more often than in years previous. However, while they may have relaxed in that aspect, terms have stretched further than before as well, with the average being 68 months for auto loans.
Terms of 85 to 96 months have gone up, too, reports Automotive News. The used car market is seeing a similar trend with terms of 73 to 84 months leaping to 17.7 percent, a 1.6 percent jump from last year.
This seems to come as a direct result of pushing sub-prime and deep sup-prime loans in an effort that helped reach last year's sales record. While those with capital have been more willing to lend their money, the ones who need it have paid the price.