Car Loan Late Payments

With interest rates climbing, and many people in over their heads in debt – it is no wonder that car loan and credit card companies are trying to find some way of deterring people from defaulting on their loans. However, with rates as high as they are, it really is difficult for the finance industries to try and get a hold on the amount of defaulting borrowers that there currently are.

Late payments on car loans and home equity loans increased in the last quarter of last year, and experts say that they will continue to grow this year. Credit car delinquencies have not increased, but rather have held steady – although still at a rate higher than they would like to see.

Many of the delinquencies that lenders are seeing is on home equity loans, as the housing market is weak and people are seeing the value of their homes drop below what they owe on them – making them “upside down” in their homes. They have used the equity that they have on their homes, and thus are now scrambling to try and keep their heads above water.

Those with adjustable rate loans are feeling the problem even more than others, as when they signed up for the loan they did not anticipate rates climbing as high as they did. Auto loans have not been affected in this way as most car loans are at a fixed rate. But that does not mean that they are not seeing their share of delinquencies. The American Bankers Association’s survey showed that “indirect” auto loans (those through dealerships) have seen an increase in delinquencies of more than 2.57% in the fourth quarter of last year.

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