We understand that you may have experienced this in the past, but now you have the affordability and income to start applying for finance again. ![]() Beyond generally high inflation, climbing car insurance rates as well as higher repair costs are adding expense to the ownership experience.Īccording to a consumer survey done by Deloitte regarding 2023 buying practices, around 10% of used car buyers were swayed by cheaper insurance premiums, in an effort to keep initial and continuing costs low.If you struggled with financial difficulties in the past, this may have led to you having arrears on your credit agreements which can then lead to Defaults and CCJs, IVAs and even bankruptcy. And part of the reason is that it's not just the car itself that is expensive. It's hard to deny that the financial outlook for current or prospective young car owners is grim. This is especially true among borrowers with lower credit ratings, though their overall share of the auto loan pool plunged in recent years as banks tightened lending standards, reducing the risk of massive defaults." "Now they have returned to and even surpassed pre-pandemic levels. ![]() Pandemic-driven government stimulus measures helped consumers gain a stronger footing and delinquencies plummeted," said Henry Hoenig, a data journalist at Jerry. ![]() "Before the pandemic struck, the rise in auto loan delinquencies had created concerns about a possible wave of defaults. Urban car ownership adds significant costs of its own, such as parking and higher insurance premiums. Meanwhile, the average used car interest rate in the US is sitting at 10.57%, while the average new car rate is 6.92%, according to data from Edmunds. To put that in perspective, 60% of baby boomers spend less than 10% of their take-home pay on monthly expenses, while the comparative percentage for Gen X borrowers is around 40%. And more than 10% of Gen Z borrowers are paying a car note that is anywhere from 41% to 50% of their gross pay. In fact, around 40% of Gen Z and millennial borrowers currently have monthly payments that are 16% or more of their household's take-home pay. By comparison, consumers ages 40 to 49 have added around 23% more auto loan debt since 2020, while those ages 50 to 70+ years old have only borrowed anywhere from 11% to 14% more.īefore you rush to blame irresponsible, coffee-buying young car owners for defaulting on their car notes, data shows the cost of owning a car eats up a significant portion of both Gen Z and millennials' annual income, and much more than it does for older generations. That's an auto debt growth of 31% for Gen Z and 29% for millennials. Many Gen Z car owners have purposefully missed payments of other expenses to pay their car loans. Though a small subset of car shoppers managed to secure low-price, low-interest deals at the onset of 2020, the majority of car purchases over the last three years have been above sticker price with high-interest rates adding insult to injury. ![]() Week after week, news of material shortages, plant shutdowns, and fluctuating prices inundate consumers, as experts say "I'd wait if I were you." For the most part, this is and has been sage advice, but not everyone was able to weather a three-year-long industry storm. It's a well-known fact that buying a car isn't exactly easy right now.
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