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More auto loans being made to subprime borrowers

The choice whether or not to take out an auto loan can be a big one. The borrower may be committing himself to years of repayment, high minimum payments, and high interest rates. This might be especially true in today's auto loan market where subprime loans are becoming more common. In fact, 27.4 percent of new auto loans made in the second quarter were made to subprime borrowers, up two percent from last years.

Though auto loan delinquencies remain well below historic levels, subprime lending in the auto market may lead to problems similar to those that wrecked the housing market during the last recession. Consumers are being given auto loans with longer repayment terms which, though lowering the cost of monthly payments, will increase the overall payment amount and may increase the chance that personal financial challenges will arise during the loan period.

A change in life circumstances can make paying on an auto loan extremely difficult. Whether an individual experiences a drop in Income due to cut hours or a lost job, or the individual suffers from an unexpected medical condition, many Americans find themselves struggling in this sluggish economy. When the risk of repossession threatens an individual's ability to get to work or school, he should consider the legal options available for Debt relief.

Many who struggle with personal debt seek to eliminate that debt. To achieve this, many choose to file for Chapter 7 bankruptcy. Though the petitioner of a Chapter 7 bankruptcy will have to sell his assets to pay as much debt off as possible, he may be able to stay repossession in order to make other arrangements. Chapter 7 also allows the individual to liquidate any remaining debt after an asset sale, which allows him the fresh start he deserves.

Others choose to file for Chapter 13 bankruptcy in an attempt to reach more manageable payments. This reorganization of debt allows the individual to keep his property while simplifying his debt repayment. Chapter 13 is a real option for those who desire to pay off their debt and retain their assets.

Filing for bankruptcy can be an emotional and confusing time. An experienced attorney can clarify the process and provide legal information so the petitioner can make fully informed decisions in his best interests. Then, when all is said and done, the petitioner will hopefully be on firm financial footing to get on with his life without fear of creditor harassment.

Source: Automotive News, "Longer loans, rising leases expose risks," Arlena Sawyers, Oct. 16, 2013

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