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Delinquent borrowers could feel more pain if economy slows

A potential slowdown in the U.S. economy from the coronavirus could spell trouble for a growing number of borrowers who are months behind on paying their car loans.

Near the end of 2019, more than 7 million Americans were 90 or more days delinquent on those loans, which is 1 million more than at the end of 2010 when borrowers emerged from the Great Recession.

Auto debt rose to $1.33 trillion in the fourth quarter, up $16 billion from the previous quarter, according to the New York Fed’s quarterly household credit and debt report. Almost 5% of auto loans are 90 days or more delinquent, the highest percentage since the third quarter of 2011. 

If there is a slowdown in the economy, that could lead to companies getting their profits squeezed, which could then result in job losses, says Tendayi Kapfidze, chief economist for LendingTree. 

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