More Americans can't afford their car payments in Biden's economy
(Photo by Joe Kovacs)
By John Hugh DeMast
Daily Caller News Foundation
Delinquency rates on U.S. auto loans hit their highest level in over a decade as low-income borrowers struggle with the end of pandemic era benefits programs and rising interest rates, CNBC reported Tuesday.
Roughly 200,000 auto loans reached 60-day delinquency after pandemic-era loan accomodation programs — intended to prevent those who were laid off during the pandemic from having their cars repossessed — lapsed this year, CNBC reported, citing data from credit agency TransUnion. An additional 100,000 remained in accommodations, contributing to the overall rate of 60-day delinquencies hitting 1.65%, according to TransUnion’s tracking of more than 81 million U.S. auto loans.
“Consumers still want to stay current as best that they can,” senior vice president of TransUnion Satyan Merchant told CNBC. “It’s just this inflationary environment is making it challenging. It leaves fewer dollars in their pocket to make the auto loan payment, because they’ve got to pay more for eggs and milk and other things.”
Inflationary pressures pushed the average cost of a new vehicle to $47,138 in September, up $2,600 compared to last year, while the average cost of a used vehicle jumped $2,500 to $30,566, CNBC reported. Average interest rates for both new and used car loans rose one percentage point to 5.2% and 9.7% compared to last year in the third quarter.
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“If we get into a position where employment starts to be a challenge in the United States and unemployment increases, that is when the industry will really start to be concerned about a consumer’s ability to pay their auto loans,” Merchant told CNBC. He noted that the nation’s low unemployment levels were helping keep delinquency rates lower than they might otherwise be.
The Federal Reserve is anticipated to raise its baseline interest rate again in its December meeting, with investors expecting it will do so by 0.75 or 0.5 percentage points. The baseline federal interest rate is currently set as a range between 3.75% and 4%.
This story originally was published by the Daily Caller News Foundation.
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