How many people do you know who can pay cash for a new car? I bet the answer is not many! The Federal Reserve Bank of New York recently released data showing that a record 107 million Americans owe on a car loan. As recently reported by CNN, that boils down to about 43% of the adult population. Just five years ago, in 2012, only 80 million Americans had auto loans. Back then, more Americans owed on a mortgage than an auto, but the tables have turned in 2017. No wonder the automakers have been reporting record sales figures!
The down side to an auto loan is the actual payment. More Data from the Federal Reserve Bank of New York show that 60 million auto loan payers are delinquent on the monthly car payments, up to 90 days behind, putting the car in a position for repossession by the lender.
This is the position that many of our clients face. A car loan can be a vicious cycle. As I stated earlier, there are not many folks who pay for a car in cash. If they can, it is usually a clunker that ends up needing costly repairs, sometimes more than its worth. In addition, many lower income individuals desperately need a car to hold a job to feed their family and will sign the bottom line regardless of interest rate. We see car loans as high as 36.00%, and sometimes higher. With an interest rate like that, one missed payments and it is compounding, making it nearly impossible to catch up. Many folks then have to make the decision to make a car payment or feed their family. If the auto is repossessed, the payment problems do not end there. If you are unable to pay the deficiency balance after your car has been auctioned by the lender who repossessed it, the lender will eventually sue you for the deficiency balance and garnish your wages or take liens on your property. This is not a good place to be for anyone!
If you find yourself or know someone who is facing problems paying their car loan, we can help. We have options to stop a pending repossession, lower the interest rate and might even be able to get you a lower monthly payment by filing a Chapter 13 Debt consolidation. If your auto has already been repossessed, we can help you with managing the remaining balance that the creditor is trying to collect.
Amy K Tanner is a shareholder in several of the Bond & Botes Law Offices. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She focuses primarily on consumer bankruptcy law in the Huntsville and Decatur offices.Read her full bio here.