Auto Loans Pass Student Loans in Consumer Debt Load, Fed Data Shows
Auto loans have moved past student loans this year as the second-largest debt burden for consumers, at $1.582 trillion compared with $1.569 trillion for student loans, according to Federal Reserve Bank of New York data, WSJ Pro Bankruptcy reported. At $12 trillion, mortgages are the largest debt for consumers. Consumers had owed more in student loans than auto loans since early 2010, when a surge of college students, some of whom lost jobs in the financial crisis and sought education and new training, led to big student loan borrowing. But the U.S. government froze payments and interest on federal student loans for the pandemic, an emergency measure that is now ending. Meanwhile, consumers bought vehicles at inflation-juiced prices. In June 2021, new- and used-vehicle inflation hit 20.4% and stayed elevated until late 2022. Some cracks are now appearing in the auto loan market. Auto loan delinquencies climbed to 3.59% in August on a seasonally adjusted basis, their highest level since April 2010, shortly after the financial crisis, according to Moody’s Analytics. [As reported in the American Bankruptcy Institute [ABI] e-newsletter of 9/21/23]