More Americans are falling behind on their car payments than ever before, with subprime borrowers feeling the most pain from soaring vehicle prices and higher interest rates.<\/p>\n
The share of subprime borrowers at least 60 days past due on their auto notes reached a record 6.65% in October<\/a>, the highest level since data tracking began in the early 1990s, according to Fitch Ratings. If you run into trouble making payments, don\u2019t wait until things become dire, said Sean Tucker, Kelley Blue Book\u2019s managing editor.<\/p>\n \u201cYou should contact your lender and let them know that you’re struggling,\u201d Tucker said. \u201cThey have programs for that, and generally speaking, they\u2019re going to make more money off helping you make the payments than they are repossessing your car and trying to sell it later.\u201d<\/p>\n Smart shopping tips in a tough auto market<\/p>\n Not sure where to start in your car-shopping journey? Here are some expert tips to score the best deal for your financial situation.<\/p>\n 1. Shop for financing before you shop for a vehicle.<\/p>\n Tucker strongly recommends keeping these two processes separate. Having financing offers in hand before choosing a new or used car gives you more leverage in negotiating with a dealer. \u201cIt’s a good idea to work with your bank or credit union beforehand, and qualify for what you can qualify for,\u201d he said. \u201cNow, if the dealer can beat it, great, but this way, you\u2019re not stuck with accepting the terms that they put in front of you.\u201d<\/p>\n 2. Consider domestic auto brands first for better deals.<\/p>\n Some domestic manufacturers are sitting on roughly 200 days of inventory, compared with just 30 days for popular imported brands such as Toyota, Tucker said. \u201cThat means that they are far more willing to negotiate with you on the price, and those cars are probably better quality than you think they are if you haven\u2019t been car shopping in a decade or so,\u201d he added.<\/p>\n 3. Bump up your down payment amount.<\/p>\n Make a larger down payment \u2014 15% to 20% of the sticker price \u2014 if possible. This reduces how much money you\u2019ll need to borrow, which can lead to better rate offers.<\/p>\n 4. Avoid extended loan terms.\u00a0<\/p>\n
The crisis reflects the deeper affordability chasm consumers face in the auto market. The average new vehicle price topped $50,000<\/a> for the first time, according to Kelley Blue Book; and this trend is likely to accelerate as vehicle retail prices climb by 4% to 8% by the end of 2025<\/a> with the arrival of 2026 models to dealerships across the country, according to Cox Automotive. Meanwhile, auto loan interest rates are averaging 7.1% for a 60-month auto loan<\/a>, according to Bankrate. <\/p>\n