Auto loan debt is the US and in fact all over the world is rising and most borrowers are found to be struggling to repay their debts. While most of the people find a way out to continue to repay their debt successfully till the end of its terms, there are a few who give it up in the middle of the process.
- They are the ones who choose different debt relief options such as debt settlement, which is the most popular debt relief option amongst the borrowers, or
- Choose filing for bankruptcy, especially by the more desperate ones.
Both of them end damaging their credit score and report thereby limiting their eligibility to get a loan in the future.
It entirely depends on your prudence and judgment as to which way you will choose to repay your car loan. Ideally, for any responsible person, the first important thing is to ensure that their car payments do not wreck their finances in any ways whatsoever.
You are not alone
Before you start sulking alone in the corner of your room thinking about the rising debts every month an plan to take any drastic step that will affect your finance, life, relationship, professional career and all aspects, be practical.
The fact that you are not alone out there will send some sign of relief. This will enable you to make some alterations in your plans to deal with your car loan and come out of it. This is not just words of consolation. There are several statistics that will prove that you are not alone. There are also few other figures that will show that several borrowers have come out of their debts following specific strategies.
According to a new study report and analysis of Federal Reserve data by Finder it is found that:
- Most Americans continue to increase their debt load due to their vehicles
- There are more than 100 million people who have a cumulative amount of $568.6 billion in auto loans
- This accounts for nearly 9.28% of all US debts of whatever sort such as a mortgage, student loans or credit cards
- In 2018 about 4.3% of active auto loan accounts became delinquent by 90 days or more
- The average amount borrowed to buy a new car amounted to $31,099or $515 a month
- The average amount borrowed for buying a used car was $21,375or $398 a month and
- Currentlythe national average of US auto loan interest rates is 4.21% for a loan offered for 60 months term.
Therefore, debts, especially auto debts are sort of inescapable but it is also true that some people do find it hard to make the monthly payments and visit NationaldebtRelief.com and other sites for an affordable debt relief option.
The auto loan delinquency rates of 90 days overdue have slowly increased over the past couple of years.This is despite the fact that the rate of unemployment has dropped to 4.1% from 4.8% in 2017 as compared with 2016.
Getting out of debt
Now, you may wonder why Americansseem to be struggling to repay their auto loans and keep up with their finances. Is it that they are taking up too much loan at once not considering their ability to repay or is it the lending policy or the economy to be blamed?
Well, the one and only reason to fall in debt and find it hard to come out is lack of proper planning. Such a plan will help you in many ways such as:
- It will save you from struggling with your car loan payments
- It will prevent your account to drift into delinquency
- You will not miss out on any payments
- It will prevent your credit score from being damaged and
- It will not risk your vehicle to be repossessed by the lender.
Most importantly, such a plan will help you to get back on your road to financial freedom and security offering you a lot of mental peace. It will also help you to be in the pink of your health. Yes, debts do affect the health of the borrowers adversely.
Steps to follow
There are several steps to follow to come out of your car loan that may seem unmanageable to you right now.
- First, craft a debt roadmap. Assess your present financial situation. You can take help of a qualified financial counselor to make a plan. The counselor may also work a way out by negotiating with your lender to come up with a better and more affordable payment plan that will not affect your credit score very much. As a last and desperate attempt, you may consider selling your car, if conditions allow.
- Second, talk to your lender and tell them that you are in trouble but certainly do not avoid creditor or collection calls. Make sure that you notify your creditor as soon as you begin to fall behind on your payments and not wait hoping things will become normal next month. It will never and it is likely that it will become worse.
Well, they may not be thrilled at both these approaches but at least it will send them a signal that you are serious about your loan and want to repay it, in your terms that is. This will make them feel more motivated to work with you and craft a more flexible repayment plan.
- They will feel that it is better to get something back rather than lose the entire money in case you file for bankruptcy.
- Also, collections and lawsuits are more expensive approach than foregoing a portion of the interest and fees to reduce the outstanding debt amount.
In most cases, they may even offer you suggestions and tips so that you do fail on your repayments this time around.
Lastly, avoid making any bad deal due to desperation and stress. Remember, there is no quick fix to such conditions. Do try out dealership loan programsto trade in your car for a lower amount than you owe. Keep a level head so that you do not fall deeper in to debt.