Variable rate car loans are exceedingly rare. Since most are fixed rate and aren’t changing as rates increase, why would people be giving back their cars, other than the usual reasons?
I can think a few reasons unique to now:
- Someone took out an auto loan with payments of $750/mo (average is $734, so pretty much average). They were able to afford it all of 2022 and for the first 3/4 of 2023. But then in October, their student loans that were in forbearance had to be paid again, and that extra $340/mo towards the student loans makes it impossible to continue paying for their nice new car. Note that loans in forbearance are reported to credit bureaus as “in good standing”, so they had that extra $340/mo cash flow without any hit to their credit rating. That’s why the car loan sailed through without too many issues.
- A couple took out an auto loan with a payment of $600/mo in 2021. They had no problem paying it because one spouse was able to get as many hours as they wanted at their job, and the extra ~10 hours a week paid for the entire car loan. But suddenly in late summer 2023, their employer has started limiting their hours, and those extra 10 hours now only happen at best once a month. Now they can’t quite afford such a high car loan payment.