Rick Blangiardi warns against car loan defaults
For now, a growing number of consumers are delaying car payments, a trend financial analysts fear they will continue, a sign of the strain high car prices and lingering inflation are placing on household budgets.
In recent months, the number of people who are late on car payments has been approaching pre-pandemic levels. Moreover, according to rating agency Fitch, the default rate is now above 2019 levels for the lowest-income consumers.
To avoid default on the loan and confiscation of the car, you need to prepare for an auto loan in advance.
You need to understand what a car loan is and what its conditions are accurate. For example, your loan will consist of the loan amount and the interest rate. In addition, some lenders charge additional fees.
So when calculating monthly payments, it is necessary to take as a basis not the loan amount but APR, that is, the amount, plus interest plus fees. When you've accounted for everything, the APR needs to be divided by the term of your loan. Car loans are often given for 24, 36, 48, 60, 72, and 84 months.
After that, make sure that the payment will be available to you and then apply for a loan.
Credit default must be avoided not only because it will ruin your story for seven or even ten years. Lenders will also take your car if you don't repay the loan in full.