Chula Vista among top U.S. cities for rising auto loan debt, new study finds
As vehicle prices and borrowing costs continue to climb, a new study finds that residents of Chula Vista are taking on auto loan debt at one of the fastest rates in the nation.
According to a report released by personal finance website WalletHub, Americans collectively owe approximately $1.7 trillion in auto loan debt, with the average household carrying nearly $14,000 in vehicle-related debt. The study ranks Chula Vista ninth nationwide among cities where auto loan debt is increasing the most.
Financial experts say the trend reflects broader economic pressures facing many households.
Galindo said that customers are increasingly focused on finding the lowest monthly payments and best financing terms as affordability becomes a growing challenge.
“Everybody is looking for the best numbers, the lowest price, the best deal,” Galindo said.
The search for affordable financing comes as vehicle prices remain elevated. According to Kelley Blue Book, the average new vehicle now costs nearly $50,000, while a used vehicle less than five years old averages about $31,000.
At the same time, interest rates have risen sharply. Galindo said that just a few years ago, buyers could often secure loans with annual percentage rates between 2% and 3%. Today, he said, the lowest rates he typically sees are around 7%.
WalletHub’s study found that residents of Scottsdale, Arizona, carry the nation’s highest average auto loan balance, exceeding $26,000, along with the highest average monthly payment at $655.
At the local level, economists say Chula Vista’s appearance near the top of the rankings is consistent with economic trends in the region.
“Cities in the southern part of the county tend to be in a little tougher spot economically than the rest of the county,” said Alan Gin, an economics professor at University of San Diego. Gin noted that while San Diego County’s unemployment rate is approximately 4.1%, Chula Vista’s rate is slightly higher at 4.4%.
Gin said inflation has increased the cost of necessities such as housing, groceries and fuel, leaving households with less disposable income.
“As a result of that, they don’t have as much to spend on other things, or if they do spend on other things like buying a car, they have to borrow more money to do that,” Gin said.
Financial experts recommend that consumers seeking to reduce auto loan costs focus on securing the lowest possible interest rate. Galindo said credit unions often offer more favorable rates than traditional lenders.
Experts also advise borrowers to pay more than the minimum monthly payment whenever possible. Making larger payments can reduce the loan principal faster and lower the total amount of interest paid over the life of the loan.
Another guideline recommended by financial professionals is to keep total vehicle expenses—including the loan payment, insurance and maintenance—below 15% to 20% of take-home pay.
