Auto Loan Borrowers Have Difficulty Keeping Up with Payments

Without pandemic-era loan accommodation, borrowers are falling behind.

Without pandemic-era loan accommodation, borrowers are falling behind.

During the height of the COVID-19 pandemic, numerous aid and accommodation programs were established to keep those whose livelihoods were impacted afloat. These programs were primarily meant to aid borrowers of various kinds of loans who may not have been able to make their monthly payments due to lost work. However, as the pandemic has calmed down, these programs have come to an end, and those who were relying on them are having difficulty keeping up.

According to a TransUnion report picked up by CNBC, about 1.65% of the over-81 million auto loans active in the United States are at least two months overdue. That’s the highest rate of auto loan delinquency seen in the United States in the last ten years.

“Consumers still want to stay current as best that they can. It’s just this inflationary environment is making it challenging,” Satyan Merchant, senior vice president of TransUnion, told CNBC. “It leaves fewer dollars in their pocket to make the auto loan payment, because they’ve got to pay more for eggs and milk and other things.”

While some accommodation programs are still active, their conditions for eligibility have been severely tightened, leaving the number of loans still supported by them far lower than this time one or two years ago.

“There has been this effect where the delinquency that may have occurred over the last few years is really just pushed out or delayed because that consumer didn’t have to make payments or their status was on an accommodation. So now some of those are hitting,” Merchant said.

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