Recent reports looking at subprime auto loan delinquencies have discovered that they are reaching record rates. For instance, the delinquency rate recently hit the highest level since 1994. When looking at car owners who are at least 60 days behind, it becomes clear that people are missing car payments more often today than they have in 32 years.
Part of this could be the cost of a new car payment. The average is now $774 per month. That is far higher than the average payment in 1994 and shows that rising costs may play a part in these missed payments.
A red light for the economy
It is not just car loans that are the issue here. Many researchers warn that this is a red flag for the economy as a whole. It could indicate that more people will start to enter foreclosure proceedings on their homes, default on credit card debt or declare bankruptcy.
Part of the issue is that people often prioritize their car loans over almost everything else. If someone only has enough money to pay their credit card bill or their car loan, they will choose the car loan so they do not lose their source of transportation. This can be critical, even if they have a limited income.
As such, if people are defaulting on car loans at record numbers, that means they are probably experiencing significant financial issues beyond those loans themselves. They may also have overwhelming credit card debt, mortgage loans, business loans, medical expenses and much more.
Considering your bankruptcy options
These reports show that the economic situation in the United States could be heading for significant issues, and it will be important for individuals to understand exactly what legal options they have when it comes to debt consolidation and bankruptcy.