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Vehicle loan debt may become issue when new loans increase

A recent report has shown that there are now more new automobile loans than there have been over the past eight years. This, in turn, may lead to increasing difficulty for some consumers who have taken on new vehicle loan debt. Some families in Washington may already be struggling to juggle their current debt loads.

The report indicated that there is concern among financial professionals that the increase in these auto loans could eventually lead to another financial crisis. They are supposedly worried over the number of loans that have been approved for those consumers who do not have a preferred credit rating. Auto companies are approving loans to these subprime borrowers, which could lead to increased numbers of delinquent debts.

While overall, the total of new loans for cars hit an eight-year high, the ones that have been approved for lower-credit borrowers are still below the levels that were recorded before the recession began in 2008. These subprime accounts doubled recently. However, they are still proportionately lower than those recorded before the last financial crisis, with the current percentage at just over 22 percent. Additionally, the numbers of loans to preferred credit borrowers have also increased.

The Federal Reserve Bank of New York stated that it will be watching the lending practices of automobile companies in order to make changes if these so-called subprime loans lead to problems in the economy. At this time, vehicle loan debt doesn't appear to be as much of a problem for consumers as compared to student loans and credit card debt. Washington families who are experiencing difficulty making ends meet (no matter what type of debt is causing the problem), may research the benefits that a bankruptcy filing may provide for them. A majority, and sometimes all, of their debt may qualify for discharge and will no longer be an obstacle to a brighter financial future.

Source: ABC News, "NY Fed: US Auto Loans Soar to Highest in 8 Years", Christopher S. Rugaber, Aug. 14, 2014

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