Auto loan default rates are at an all-time high, especially for Gen Z and millennials. Are you at risk of defaulting on your loan? Are there steps you can take to prevent defaulting? Automoblog’s new article has answers for you.
The consequences of defaulting on your loan can be severe and can affect your financial future – from negative effects on your credit score to having your vehicle repossessed. Especially as a young car owner struggling to make your monthly loan payments, it’s worth knowing the steps you can take to avoid these repercussions.
Gen Z and millennials are feeling the brunt of today’s inflation, which is one factor contributing to their increasing default rates. Younger generations experienced some of the highest rates of inflation in 2021 compared to older generations.
In today’s environment, many people are having a difficult time fulfilling financial obligations. However, auto loan default rates for young adults in particular have significantly increased in the last couple years. Current Gen Z auto loan default rates are 0.46% higher than they were prepandemic, while millennial rates show an even larger increase of 0.48%.
On top of that, vehicle costs have increased as well. The average cost of a new car reached $47,148 in May 2022. Automoblog explains that “record-breaking new vehicle prices are making car purchases an even bigger challenge, now requiring 40.6 weeks of income on average – close to one year’s worth of pay.”
With all of the financial challenges facing them today, young borrowers can find information on the consequences of defaulting on their auto loan and guidance on how to avoid doing so in this article.