Remember back before financial crash in 2008 a little over a decade ago? One of the heroes of the massive worldwide economic crisis was the fact that more than 5.5 million Americans could not pay the bill and were more than 90 days behind the bill. According to a report from the Federal Reserve Bank of New York, we are heading for a critical mass with over 7 million car loans more than 90 days overdue.
Economists throw up flags that this can be an indicator of major future financial problems. Despite the economy currently being categorized as strong and unemployment at fairly low prices, many US borrowers find it harder to stay on top of their bills.
Part of this excitement, which can be calculated, comes from a bloating of new car loan origins in 2018. Auto loan debt in the US market has climbed steadily since 2011, beating an incredible $ 584 billion at the end of 2018.  Preview Thumbnail “/>
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A larger share of new car loans has been given to low-quality buyers, as if society did not learn anything from the last time. Because lending institutions can charge exorbitant annual percentage interest rates to those with non-prime or subprime credit, loans to that segment have increased from 28% of loans in 2009 to over 39% in 2015. With longer terms, these are marginally marginalized people. Being able to pay for a car is on the hook for several years than traditionally.
More than 4% of borrowers aged 18-29 are behind the car payment more than 90 days, enough to be afraid of repossession. Furthermore, over 8% of borrowers with credit points below 620 are categorized as "seriously offensive". This data suggests that American youth, largely with independent credit, has a difficult time in today's economy.
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From a pragmatic perspective, says the Washington Post: "A car loan is usually the first payment people make because a vehicle is essential to get to work, and someone can live in a car if everything else fails." Still saying that this is usually a signs that low-income and working-class Americans are struggling.
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Although this may be a major indicator of major issues, the car loan industry is unlikely to lead to financial collapse as the mortgage industry did in 2008. Firstly, a new car loan is on average at around $ 35,000 per house while homes are generally in hundreds of thousands of dollars. Because of the simple fact, all car debt in this country stands at just over $ 1 trillion, while mortgages are a staggering $ 9 billion industry.
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Read more Read  If people do not pay the bill, but what are they not able to pay? Student loan debt? Rent? It is not a good sign of economic growth, anyway. I do not suggest you start running on the banks, but maybe just be careful about your costs until things move out.