craig
2024-06-03 19:43:49 UTC
Cities in California are facing sky-high inflation and a major housing
market problem, but they may also be headed for a car debt crisis.
In 2023, the California Policy Lab found that about 8 million
Californians owed on their auto loans, with an average debt of $24,900.
Read more: Compare the Best Auto Loan Refinance Lenders
On May 30, a new report from WalletHub ranked the cities where auto loan
debt was increasing, with two California cities making the top five:
Fremont at No. 3 and Chula Vista at No. 4. Another two California cities
were included in the top 20: Anaheim and Bakersfield took the 14th and
15th spots, respectively.
Here is the list of top 10 cities with rising auto loan debt:
Winston-Salem, North Carolina
Scottsdale, Arizona
Fremont, California
Chula Vista, California
Miami, Florida
Glendale, Arizona
Lubbock, Texas
Atlanta, Georgia
Anchorage, Alaska
Colorado Springs, Colorado
In Fremont, the highest-ranking California city on the list, the average
monthly auto loan payment was $559, WalletHub reported. The city's
residents also had an average balance of $22,733, the fifth-highest in
the country.
"California's exorbitant housing costs and overall high cost of living
likely play a significant role in residents taking on larger car loans,"
Michael Ryan, a finance expert who runs michaelryanmoney.com, told
Newsweek. "When everything else costs so much, your cash reserves are
depleted, leaving car buyers with less money to put as a down payment."
WalletHub reported that the average auto loan in Fremont also increased
by 1.9 percent between the fourth quarter of 2023 and the first quarter
of 2024, marking the sixth-highest uptick in the country.
Alex Beene, a financial literacy instructor at the University of
Tennessee at Martin, said that for residents in the top cities, the
rising auto loan debt might not be as much of a problem as the numbers
would suggest.
"In some ways, the list is misleading, and in other ways, it's not,"
Beene told Newsweek. "Some of the top cities, Scottsdale and Fremont,
may have seen a significant increase in the average amount of automobile
debt, but the average income levels in those locations are higher than
the nation average, and the odds are high that most who take on that
debt can easily pay it back."
Beene said other cities, such as those in southeastern states, might be
headed for more trouble, as incomes tend to be low and credit card debt
is also skyrocketing.
"At the end of the day, it's bad for the long-term economic outlook of
the person taking on that debt," Beene said. "Bigger and longer-lasting
loan amounts ensure there's less money for that person not just to live
on, but invest for their future. Car values may be on the rise, but
that's not an excuse to go into a substantial amount of debt for what
will be a depreciating asset."
Ryan also said, based on the list's rankings, that those living in the
southeast might be experiencing deeper financial strains.
"Winston-Salem, NC, at the top of the list caught me off guard. Such a
large increase in auto debt in this area could potentially indicate that
residents are facing financial difficulties and resorting to larger
loans," Ryan said. "Not out of choice, but out of necessity."
Those who find themselves with significant levels of car loan debt have
various options, but making extra payments and setting up automatic
payments are some of the quickest ways to clear your debt in the long run.
If you have good credit, you can also ask to refinance the terms of your
loans.
"These loans become increasingly burdensome, leaving less disposable
income for other expenses or savings," Ryan said. "If this trend
continues, we may eventually witness a surge in delinquencies, defaults,
and overall economic instability."
https://www.newsweek.com/california-has-car-debt-problem-1907518
With Newsom ruining California and Biden guiding the USA into an
iceberg, what else could go wrong?
market problem, but they may also be headed for a car debt crisis.
In 2023, the California Policy Lab found that about 8 million
Californians owed on their auto loans, with an average debt of $24,900.
Read more: Compare the Best Auto Loan Refinance Lenders
On May 30, a new report from WalletHub ranked the cities where auto loan
debt was increasing, with two California cities making the top five:
Fremont at No. 3 and Chula Vista at No. 4. Another two California cities
were included in the top 20: Anaheim and Bakersfield took the 14th and
15th spots, respectively.
Here is the list of top 10 cities with rising auto loan debt:
Winston-Salem, North Carolina
Scottsdale, Arizona
Fremont, California
Chula Vista, California
Miami, Florida
Glendale, Arizona
Lubbock, Texas
Atlanta, Georgia
Anchorage, Alaska
Colorado Springs, Colorado
In Fremont, the highest-ranking California city on the list, the average
monthly auto loan payment was $559, WalletHub reported. The city's
residents also had an average balance of $22,733, the fifth-highest in
the country.
"California's exorbitant housing costs and overall high cost of living
likely play a significant role in residents taking on larger car loans,"
Michael Ryan, a finance expert who runs michaelryanmoney.com, told
Newsweek. "When everything else costs so much, your cash reserves are
depleted, leaving car buyers with less money to put as a down payment."
WalletHub reported that the average auto loan in Fremont also increased
by 1.9 percent between the fourth quarter of 2023 and the first quarter
of 2024, marking the sixth-highest uptick in the country.
Alex Beene, a financial literacy instructor at the University of
Tennessee at Martin, said that for residents in the top cities, the
rising auto loan debt might not be as much of a problem as the numbers
would suggest.
"In some ways, the list is misleading, and in other ways, it's not,"
Beene told Newsweek. "Some of the top cities, Scottsdale and Fremont,
may have seen a significant increase in the average amount of automobile
debt, but the average income levels in those locations are higher than
the nation average, and the odds are high that most who take on that
debt can easily pay it back."
Beene said other cities, such as those in southeastern states, might be
headed for more trouble, as incomes tend to be low and credit card debt
is also skyrocketing.
"At the end of the day, it's bad for the long-term economic outlook of
the person taking on that debt," Beene said. "Bigger and longer-lasting
loan amounts ensure there's less money for that person not just to live
on, but invest for their future. Car values may be on the rise, but
that's not an excuse to go into a substantial amount of debt for what
will be a depreciating asset."
Ryan also said, based on the list's rankings, that those living in the
southeast might be experiencing deeper financial strains.
"Winston-Salem, NC, at the top of the list caught me off guard. Such a
large increase in auto debt in this area could potentially indicate that
residents are facing financial difficulties and resorting to larger
loans," Ryan said. "Not out of choice, but out of necessity."
Those who find themselves with significant levels of car loan debt have
various options, but making extra payments and setting up automatic
payments are some of the quickest ways to clear your debt in the long run.
If you have good credit, you can also ask to refinance the terms of your
loans.
"These loans become increasingly burdensome, leaving less disposable
income for other expenses or savings," Ryan said. "If this trend
continues, we may eventually witness a surge in delinquencies, defaults,
and overall economic instability."
https://www.newsweek.com/california-has-car-debt-problem-1907518
With Newsom ruining California and Biden guiding the USA into an
iceberg, what else could go wrong?