Student Loan Debt
U . S . student loan balance : $ 1.8 trillion ( fourth quarter of 2023 )
Just 500,000 borrowers out of 43.5 million student loan borrowers , a 1.15 % payment rate , were paying on time prior to the October 1 , 2023 payment restart date . Many of these average $ 500 + per month student loans are adjustable and are likely to increase over time , sadly .
The average federal student loan debt is $ 37,338 per borrower . Private student loan debt averages $ 54,921 per borrower . Twenty years after entering school , 50 % of the student loan borrowers still owe more than $ 20,000 each on outstanding loan balances , according to the Education Data Initiative ( May 22 , 2023 ).
Just 90 days after the October 1 , 2023 student loan payment restart date , any ongoing delinquent student loan payments may be shared with the credit bureaus as early as January 1 , 2024 . If so , the FICO credit scores for delinquent student loan borrowers may begin to fall as their borrowing costs for future loans may rise as well .
Worsening Automobile Loan Sector
In September 2023 , Fitch Ratings reported that 6.11 % of automobile loan borrowers were at least 60 days late on their payments . This is the highest delinquency rate since the early 1990s .
While a 30day late can often be a mistake by a borrower who forgot about their payment , a 60day later indicates possible significant financial challenges . Few people want their car repossessed , so
it ’ s usually a top priority monthly debt obligation that a borrower will focus on to get paid each month . Without a car , how does someone get to school , work , or to visit friends and family if they don ’ t have access to affordable and convenient public transportation nearby ?
• Average subprime car loan rates are reaching the 17 % – 22 % loan rate range .
• The percentage of subprime auto borrowers who are 60 + days past due on loans hit an alltime record high of 6.1 % in September (# 2 highest : 1994 – 6.0 %; and # 3 highest : 2008 : 5.0 %).
• The average new car price is now higher than $ 48,000 .
• Average new car payment rates are near $ 750 / month and the average student loan payment is just over $ 500 / month . For consumers with both forms of debt , they are paying close to $ 1,250 per month for just their car and student loan while not counting insurance , gasoline , or maintenance for the car .
• The average used car price now is $ 30,700 as compared with an average used car price just under $ 8,000 back in 2008 .
• The average loantovalue ratio for a used car is 125 % LTV ( no money down + taxes , license , registration , warranty , other fees , and declining value over time ).
• There are now 20,000 car repossessions PER DAY ( 600,000 per month ) while rising exponentially each consecutive month . If the same pace of rising and compounding car repos continues onward , there might be upwards of one million car repos PER MONTH in 2024 ( yes , one million per month ).
There are approximately 100 million car loans across our nation . However , there are an estimated 276 million automobiles nationwide , so the car loantototal cars nationwide ratio is just over 36 % ( 100 million / 276 million = 36.23 %).
Moody ’ s recently warned about potential automobile loan and credit card default rates as high as 9 % to 10 % in 2024 . If so , this might be equivalent to nine to 10 million car loan defaults or repos out of the total 100 million car loans . If proven true , a nine to 10 million car loan default rate would make the one million car repossession projection for 2024 seem much too conservative and only a fraction of how bad the car delinquency numbers may reach .
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