America has a serious fixation on car culture that might be hard to deny. Owning a motor vehicle is often about more than just transportation, and people in Florida often feel as if their choice of ride says a lot about who they are. However, as auto loans account for a significant portion of consumer debt, and interest rates are on the rise, some vehicle owners could find themselves in need of debt relief.
Current interest rates for five-year loans for new cars are currently hovering around 5 percent. A four-year loan for a used vehicle will usually have about a 5.7 percent interest rate. However, experts predict that these interest rates will jump by upwards of 10 percent by the end of 2019. Those buying new cars later in the year could potentially tack on a 6.4 interest rate just for buying a used vehicle, and as much as 5.5 percent for a new car.
Around 44 percent of adults in America are currently paying off auto loans. The average person buying a new car borrows about $31,000. If one’s loan is a fixed rate — which most are — then the changing interest rates should not be of much concern. But what about those with variable rate loans or those who need to purchase a new vehicle to replace an old one? With a 5.5 percent interest rate, a borrower who took out a $31,000 loan would end up paying $35,528 after five years.
Auto loans account for 9.3 percent of all consumer debt in the country, making it the number three only after student loans and mortgages. This is an especially tricky situation for some people in Florida, as not everyone has access to public transportation, and owning a vehicle is often a necessity. This means that achieving debt relief is not as simple as selling off a vehicle and going without. When auto loans and other debts become impossible to repay, individuals might want to consider the benefits of pursuing bankruptcy.