As more homeowners struggle to hang on to their homes, motor loans delinquencies are on the rise. For many, the choice between keeping their home or their cars has led them to decide that their homes are much more important. “We’ve been watching this over the past several years, and auto loan delinquencies have been steadily getting higher,” said Keith Leggett, a senior economist with the American Bankers Association.
“This is just a time when people are getting squeezed,” Gerald Neiman, a bankruptcy attorney said. “People try to prioritize the best they can. Housing and feeding the family is certainly top priority. Cars can slip down the list of priorities.”
In order to avoid repossession, many experts are encouraging car owners to contact their banks for an extension. Carol Kaplan, a spokeswoman for the American Banking Association stated, “You’re best off to contact the lender immediately after you see yourself running into trouble. Sometimes you can work out a payment plan and avoid repossession.”
According to the ABA, delinquencies for indirect auto loans rose sharply, although rates for direct loan delinquencies did go down slightly during the third quarter of 2007. However, as the housing crunch continues, these numbers could rise even more.
Related reading: Bright Light
Comment on this article