After the Great Recession, which many people think was caused in part by subprime mortgage lending, buying a home became more difficult for many people in North Carolina. However, auto loans continued to be readily available and it appears that large numbers of people took advantage of this. In fact, according to CNNMoney, the number of auto loans is currently outpacing the number of home loans across the country.
In total, 107 million people, or 43 percent of adults, have debt from purchasing a car. The problem is that 6 million of those people are behind on their payments and in danger of having their vehicle repossessed. It is thought that some of the people who took out these car loans did not fully understand the terms of the deals they were getting and ended up with more car than they could afford.
Forbes reports that the median loan amount for a used car at the end of 2016 was $19,329. The average for new cars was $30,621.
In order for those with low credit scores to be able to afford vehicles, they were saddled not only with high interest rates but also very lengthy loan terms. By stretching out the payments over a longer period of time, people pay less each month, perhaps giving them the illusion that they could afford the car they wanted. 32.1 percent of loans for new cars last year were for 73 to 84 months. In the past, most car loans clocked in at 48 months.
