Car Loan Delinquencies Soar
May 13, 2008
The housing crisis gets a lot of press, but there is also problems brewing in the auto loan markets. Even though auto loans have fixed interest rates, as compared with adjustable mortgage rates on homes, many consumers are struggling to pay their auto loans on time. In many cases, they are discovering that have too much debt when it is all added up. This, of course, can lead to late payments.
According to the American Bankers Association, auto loan delinquencies on indirect auto loans, which are made through a third party and constitute roughly 90 percent of car loans, soared to more than 3 percent in the fourth quarter of last year. This is the highest rate in 17 years. Delinquencies are defined as payments that are more than 30 days past due.
“The auto industry is not exempt from the current stress that’s out there in the economy,” reports Carol Kaplan, spokeswoman for the ABA. “If you’re going through it right now, you’re not alone.”
Those who find themselves late on auto loans or in jeopardy of being late soon should not ignore the problem. Call your lender and discuss your options; you may have more than you think.
Consumers should understand that although they may have signed the paperwork for the loan at the car dealership, the transaction is financed by a third-party lending institution. Toyota Financial Services, Ford Credit, Chrysler Financial and GMAC Financial Services are among the largest. Check your paperwork to find out whom to call. There is no penalty for trying to work this out before it becomes a full blown problem