Latest news with #autoloan
Bloomberg
14 hours ago
- Business
- Bloomberg
Even Top Earners Are Falling Behind on Credit Card and Car Payments
Upper-income Americans are increasingly falling behind on credit card and auto loan payments, signaling an underlying vulnerability in the US economy as the labor market slows. Delinquencies on such debts from those making at least $150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, according to the credit-scoring firm VantageScore. A recent Federal Reserve Bank of St. Louis study found the share of people making late card payments in the highest-income zip codes has risen twice as much over the last year as in the lowest-income ones.
Forbes
a day ago
- Automotive
- Forbes
Is It Time To Buy A New Car? Auto Loan Rejection Rates Drop
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. Getting behind the wheel just got easier, as auto loan approvals are picking up speed. July 2025 data from the Federal Reserve Bank of New York shows that rejection rates for auto loans have fallen notably in the past quarter, from 14% in February to 6.7% in June. As access to credit continues to improve, consumers looking to finance a car may find the process smoother this summer. In other words: the green light for new car financing is flashing bright for many. The data from the New York Fed shows a broad decline in loan application rejections, particularly in categories that had been tightened earlier in the rate hike cycle. Auto loan rejection rates fell to 6.7%, down from 14% in February. Mortgage refinance rejections also dropped to 14.6%, compared to a whopping 41.8% in February. Rejection rates are dropping, and at the same time, consumers are feeling better about credit access. Fewer households say it's hard to get credit now, and more expect things to improve over the next year. And while interest rates are still high by pre-pandemic standards, the Fed's pause on further hikes seems to give lenders and borrowers a little breathing room. Several factors are helping loosen the credit spigot. Stable employment: The labor market remains resilient, with unemployment hovering around 4%, according to the Bureau of Labor Statistics. Stable income supports stronger borrower profiles. Federal rate stabilization: Rates are still high, but the Fed's decision to hold steady has added some predictability. That stability, analysts say, can help reduce the risk premium lenders build into approvals, making credit a bit easier to come by. Improving consumer balance sheets: After years of pandemic-era savings and stimulus, some households are still better positioned financially, even with rising costs. With auto loan rejections declining, this could be a good moment to finally trade in that car that's been breaking down weekly. Here are some of the best auto loan providers of 2025 . However, it's not a free-for-all. The same New York Fed survey shows that experienced rejections for credit card limit increases climbed from 30.7% last June to 37.8% this year, signaling growing lender caution around revolving credit. Even with approval odds improving, not everyone should jump at the chance to borrow. Rates for auto financing are still high, around 7% to 8%. Approval rates have improved, but monthly payments can still be a burden, especially with elevated new car prices. For example, let's say you're eyeing a $20,000 car. With a 7% interest rate over five years, you'd pay roughly $400 monthly. If you're eyeing a $35,000 car, that jumps close to $700 a month. Even though getting approved these days is easier, those monthly payments add up quickly, especially when you factor in insurance, taxes, and repairs. Before you sign on the dotted line, ensure you're comfortable with the full cost and that it won't break your wallet. Getting credit approval is easier than earlier this year, especially for auto loans and mortgage refinancing. But that doesn't mean it's cheap. Interest rates are still relatively high, and consumers should approach new debt cautiously. Improved access is a good sign for the broader economy, indicating confidence on both sides of the lending equation. Make sure any credit decision fits your financial picture, not just what's trending in the data.
Yahoo
3 days ago
- Automotive
- Yahoo
Trump's new car loan interest deduction — here's how to qualify for a tax break
Car buyers may now benefit from a new tax break that allows them to deduct up to $10,000 in auto loan interest each year from their federal income taxes — reducing their taxable income. The provision, which is in effect for new cars purchased from 2025 through 2028, is part of the 'big beautiful bill' legislation signed into law by President Donald Trump on July 4. The bill included several new tax breaks, both permanent and temporary, and extended certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Although the maximum deduction is set at $10,000 annually, most auto loans don't accrue that much interest. Plus, there are some strict limitations on what qualifies for the tax break and how long it lasts. Who qualifies for the new auto loan tax break? Unlike some tax deductions, taxpayers can take advantage of the new car loan interest deduction whether they itemize or take the standard deduction. But this tax break is available only for a limited time — it applies to qualified purchases made from 2025 through 2028 — and it has income-based limits. Single filers with a modified adjusted gross income (MAGI) of $100,000 or less qualify for the full deduction. Married couples filing jointly must have MAGI of $200,000 or less. The deduction begins to phase out by $200 for every $1,000 over these limits and disappears entirely beyond certain thresholds. Still, lower-income households may not see a significant benefit. Because deductions are 'based on your tax rate, households in lower brackets will save less,' says Lisa Greene-Lewis, a CPA and tax expert with Turbo Tax. Learn more: 2025 tax brackets and federal income tax rates What vehicles qualify for the car loan deduction? To be eligible, vehicles must meet the following criteria: Be a new car purchased with a loan on or after Jan. 1, 2025. Be assembled in the United States. Be a car, minivan, SUV, pickup truck or motorcycle. Weigh less than 14,000 pounds. Be used for personal (not commercial) purposes. 'Only new vehicles secured by an auto loan qualify,' Greene-Lewis says. 'Leased vehicles, used cars and vehicles purchased for business use are excluded.' Experts also caution buyers to verify manufacturing origins before purchasing. 'Even if you're buying an American brand like Ford or GM, the final assembly must occur in the U.S. and the vehicle must be delivered to the dealership ready to drive,' Guinan says. Boost your tax break with the EV tax credit As part of Trump's tax bill, the electric vehicle (EV) tax credit will be eliminated after Sept. 30. Until then, taxpayers can still claim up to a $7,500 credit for new qualifying EVs. The EV credit was originally enacted in 2008 and expanded under the Inflation Reduction Act of 2022. Its repeal, along with other clean energy credits, limits planning opportunities beyond this year. However, 2025 offers a unique window to combine the expiring EV tax credit with the new car loan interest deduction. 'Since the deduction is retroactive, any new EV purchased after Dec. 31, 2024, may qualify for both benefits,' Guinan says. 'As long as your vehicle meets both requirements, you can deduct your auto loan interest and claim the tax credit.' Taxpayers should note the difference in how each break works: The EV tax credit reduces your total tax bill dollar for dollar. The car loan interest deduction reduces taxable income, meaning the actual savings depends on your tax bracket. 'For instance, if you pay $1,200 in interest and are in the 12 percent tax bracket, you would save $144,' Greene-Lewis says. Remember, you have until the end of 2028 to take advantage of the new car loan interest deduction. After this time, the credit will expire unless Congress extends it. MORE: No tax on tips and overtime: Here's how your taxes may shrink
Yahoo
17-07-2025
- Business
- Yahoo
A Missourian Asks For The Best Way To Tackle Three Debts: 'I Make $26,000 A Year After Taxes'
A Missourian earns $26,000 per year after taxes and needs help with navigating three debts. The first debt is a personal loan that has a $1,760 balance. The second debt is one to an internet provider that is around $300. However, this charge is incorrect, and the Missourian has deferred it to another debt collector. The final debt is a $10,000 auto loan with a three-year plan. The Missourian admits to making mistakes in the past and turned to Reddit for advice on managing the loans. These were some of the suggestions Redditors offered. Don't Miss: $100k+ in investable assets? – no cost, no obligation. Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — Work On Your Income Although it is important to pay off debt and create a plan, you can only get so far with a low income. Penny pinching eventually reaches its limits, and that's why multiple Redditors suggested that the Missourian boost their income. A side hustle or part-time job can go a long way in helping the Missourian out of debt. The extra work will eat up more time on their schedule, but having more control over long-term finances is worth the short-term sacrifice. The Missourian may also pursue a higher-paying career after exploring new income streams. Staying at the same job with the same pay isn't a winning strategy in the long run. Looking for ways to increase income is the best long-term solution for the Missourian. Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — Start With The Smallest Debt Some Redditors suggested the debt snowball strategy to pay off debt. After paying off the internet provider, the Missourian can prioritize the personal loan and wrap up by paying the auto loan. Knocking out the $300 debt will give the Missourian a small win that can compound into something greater. Paying off this debt also frees the Missourian from the debt collector's phone calls. The Missourian still has to make minimum monthly payments on the personal loan and the auto loan. However, tackling smaller balances can help the Missourian feel like they are getting on the right track. Given that the Missourian admitted to making financial mistakes, the debt snowball method seems more appropriate than the debt avalanche Making Bad Financial Decisions It's good that the Missourian acknowledged past mistakes. Some people refuse to admit or address the mistakes that got them into debt. It can also result in a financial recovery. Paying off debt and saving money can put the individual on a better path toward long-term financial goals. Unfortunately, some people rebound financially only to fall back into bad habits. Some people pay off credit card debt only to blow through the money all over again. Other people make matters worse. These types of people may take out home equity loans to consolidate credit card debt and then proceed to get deeper into credit card debt. It's important to acknowledge and correct the bad financial habits that put you in an unfavorable position. That way, when you apply good financial habits and recover, you can preserve your success instead of falling back into bad habits. Read Next: Can you guess how many retire with a $5,000,000 nest egg? . Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A Missourian Asks For The Best Way To Tackle Three Debts: 'I Make $26,000 A Year After Taxes' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
14-07-2025
- Automotive
- Yahoo
How the "big, beautiful bill" helps car buyers save money on taxes
Millions of car buyers in the U.S. could soon get some tax relief thanks to a provision in the so-called "big, beautiful bill" that was signed into law on July 4 by President Trump. The idea of giving a tax break for auto purchasers was first floated by Mr. Trump while on the campaign trail in October, when he promised that such a measure would "make car ownership dramatically more affordable for millions and millions of working American families." That promise has now materialized as part of the One Big Beautiful Bill Act, with the new tax break taking effect for car purchases starting in 2025. But the deduction also has income limitations that narrow the number of Americans who can claim it, while used car buyers and vehicle leasers do not benefit. Still, car buyers who have bought a new vehicle this year or are planning to do so in the next four years may get some tax relief when they file their 2025 tax returns. The deduction will expire in 2028, which means car buyers can only take advantage of the benefit for four tax years. At the same time, the One Big Beautiful Act eliminates the federal tax credit for electric vehicles after Sept. 30. The tax break, which provides a $7,500 for new EVs and a $4,000 credit for used EVs, is credited with helping make electric vehicles more affordable for many buyers. Here's what to know. How much is the new auto loan deduction? The new tax cuts and spending law enables car buyers to deduct up to $10,000 in "qualified passenger vehicle loan interest during a given taxable year," beginning with 2025 purchases. While that's similar to the mortgage interest deduction available to homeowners, there is one major difference: Car buyers will be able to itemize their auto loan interest even if they take the standard deduction. By comparison, the mortgage interest deduction is only available to taxpayers who itemize. Which vehicles qualify for the deduction? The tax break applies to the purchase of new cars, motorcycles, sport utility vehicles, minivans, vans and pickup trucks weighing less than 14,000 pounds (referred to as light vehicles). Used cars don't qualify. To qualify for the deduction, a vehicle also must be assembled in the U.S., which further limits the tax break. The deduction also only applies to vehicles purchased for personal use, not for fleets or commercial purposes. And it excludes autos that are leased, which represent about one-quarter of all auto sales in the U.S., according to Experian. What are the income limits for the auto loan deduction? The full break can only be claimed by single taxpayers with a modified adjusted gross income (MAGI) of $100,000 or less or married couples with a MAGI of $200,000 or less. Modified adjusted gross income is your adjusted gross income, which can be found on line 11 of your 1040 tax return, with some items like savings bond interest added back in, according to the IRS. Under the new law, the auto loan deduction shrinks for people with MAGIs above those thresholds, with the amount reduced by $200 for each $1,000 in income above those levels. The deduction is completely phased out for single filers earning above $150,000 and married couples with incomes above $250,000. How many Americans will qualify for the car loan deduction? An estimated 3.5 million new vehicle loans could be eligible for the tax break this year if purchasing patterns stay the same and after excluding commercial vehicles and customers above the income cutoff, said Jonathan Smoke, chief economist at Cox Automotive. About 60% of the 15.9 million new light vehicles sold last year were financed with auto loans, according to Cox data. How much will the car loan deduction save on my taxes? That depends on the size of your auto loan and whether you fall below the income thresholds for the new tax break, but the typical car buyer could save hundreds per year on their taxes. The average new vehicle loan is about $44,000 financed over six years. Interest rates vary by customer, so the savings will, too. In general, the tax deduction will decline after the initial year because interest payments on loans are front-loaded, while principal payments grow on the back end. Car buyers who qualify for an auto loan rate of about 6.5%, typically available to consumers with high credit scores, could deduct $3,000 in the first year of owning their car and about $1,800 per year after that for the remainder of the loan, according to the American Financial Services Association, a consumer credit industry trade group. Deductions reduce a filer's taxable income, which helps lower their tax burden. For instance, someone in the 22% tax bracket could save $660 on their taxes by claiming a $3,000 auto loan deduction. At a 9.3% interest rate — typical of people with subprime credit scores — an average new vehicle buyer could save about $2,200 on taxes over four years, Smoke said. Sen. Lindsey Graham says "a turning point, regarding Russia's invasion of Ukraine, is coming" Trump pushes senators to make $9.4 trillion in spending cuts Student's unique talent that's for the birds Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
