A growing number of Quebecers are burdened not only by their mortgage payments, but also by their car loans.
• Also read: After mortgages, car loans are putting a strain on Quebec households
As a result of significant increases in auto prices and inflation, the country’s auto loan delinquency rate of 90 days or more has increased by 29% in a year, Equifax recently announced.
According to the president of Jean Fortin et Associés, Pierre Fortin, licensed insolvency practitioner, two phenomena in particular have contributed to the significant increase in monthly car payments.
“First, there is the significant increase in the value of vehicles – with the pandemic there has been a vehicle shortage, which has driven up prices: this year, on average, a person will have to pay $15,000 more for a new car than last year. “,” he explains in an interview with TVA Nouvelles.
“The second phenomenon concerns the interest rate: we no longer have promotional interest rates from manufacturers that allowed us to rent or buy at 0% interest, i.e. 1-2%. Nowadays they are more normal loans, as they say, bank loans at 7-8-9% and for second chances often 12-15-20% interest,” he explains.
The moderator Michel Jean, in turn, wonders in an interview about a possible change in consumer habits that could explain the recent increase in crime rates. Two decades ago, certain car brands such as BMW and Mercedes were reserved for a wealthy minority of the population.
Additionally, he argues that the SUVs that are proliferating on our roads often cost much more than the small cars they have replaced.
“Isn’t that the case too? “Everyone thinks it’s normal to have a $40,000, $50,000, $70,000 vehicle…” he argues.
“That’s a very good point,” agrees Pierre Fortin.
The expert points out to car owners and lessees who can no longer afford their monthly payments that the market is currently favorable for sellers and that putting your car up for sale can be strategic in this regard.
“You must therefore check the value of your vehicle in the market – on platforms such as Kijiji and others – to verify its value. If we are able to sell at least at the same price as what we owe, or even higher, then all the better that we can avoid paying,” he explains.
For all the details, listen to the full interview with Pierre Fortin in the video at the beginning of the article.