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Consumers With Both Student and Auto Debt Tend to Owe Less on Car Loans, but Gap Widens for Those Who Owe More on Vehicles

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Both the cost of college and the cost of a car — new or used — have been on the rise for quite some time, with vehicle prices skyrocketing during the coronavirus pandemic. Despite national attention on the student debt crisis right now, more Americans have auto debt than student debt.

But plenty of consumers — 23.7% — owe balances on both auto and student loans. LendingTree researchers analyzed 343,000 anonymized credit reports, finding the median student debt for dual-borrowers is higher than the median auto debt. But those whose auto loan balances are higher than their school debt owe more than double on vehicles than education.

Analysts sorted this data by generation, metro and state to see where consumers stand on their auto loan and student loan balances — and how they compare.

Key findings

  • Nearly 1 in 10 Americans with both auto and student loan debt owe more on the vehicle than the education. The 8.4% of those with both debts who have higher auto loan balances owe 256.4% more in auto loans ($18,242) than student loans ($7,114).
  • Consumers across generations — Gen Z, millennial, Gen X and baby boomers — are more likely to have auto debt if they don’t have student debt. Both Gen Xers (ages 41 to 56) with a credit report and those in this age range who are student debtors are more likely to have auto debt than consumers in other generations.
  • The median auto debt among dual-borrowers is higher than the median student debt balance in just one of the 101 largest U.S. metros — McAllen, Texas. Consumers here owe a median of $16,100 on their vehicles, compared with $13,001 in student loans.
  • Among the 50 states, consumers with both types of debt in Wyoming have the highest auto debt to student debt ratio at 89.2%. Louisiana follows with an 86.0% ratio, just edging Arkansas’ 85.9%.

Student loan borrowers with smaller balances may take on more auto debt

Even as the costs of new and used cars have climbed amid the coronavirus pandemic, the average price of a new car is still a fraction of the average total cost of a four-year college education. But while scholarships and financial aid can often help students avoid taking out loans for college, it’s not as easy to avoid taking out an auto loan if you can’t buy a car outright.

Of the millions of Americans who have student debt, 23.7% also carry auto loan debt. Most of these dual-borrowers owe more on their student loans than their auto loans, with a median balance of $21,177 on their student debt, compared with $14,231 owed on their vehicles.

For the 8.4% of dual-borrowers who owe more on their vehicles, the median student loan balance drops to $7,114, while auto debt creeps up to $18,242. Borrowers graduate with an average of $29,900 in private and federal student debt — as of the most recent data — while consumers borrow an average of $34,635 for new cars. This means that those who graduate with less school debt are likely to have a higher amount of auto debt. The higher amount financed in their car loans could be due to more expensive vehicles, smaller down payments and/or more vehicle products, like service plans or extended warranties.

While federal student loans may help folks save on a college education if they’re able to pursue loan forgiveness down the road, financing a car can be beneficial if you find the right auto loan. LendingTree senior autos writer Jenn Jones explains how consumers can leverage financing deals to build savings.“​​If you could finance a car at 0% interest for five years, it would be smart to do so and use your saved money to earn more than 0% interest during that time,” Jones says.

Where those with both debts owe more in auto loans

In all but four states and 13 of the 101 metros examined, the share of dual-borrowers who owe more on their auto loans than their student loans is larger than the national 8.4%. Among states, the segment grows to as much as 19.8% in Colorado, where the median auto loan balance of $18,494 easily trumps the median student debt balance of $6,766 among borrowers with both debts.

The difference between balances isn’t too far off in Virginia, where 19.1% of dual-borrowers owe a median of $11,267 more on auto loans than student loans. The share of borrowers owing more on vehicles drops to 18.1% in Rhode Island.

States with highest share of dual-borrowers who owe more on auto loans
Rank State Percentage of people with both debts who owe more for auto Their median student loan debt Their median auto loan debt
1 Colorado 19.8% $6,766 $18,494
2 Virginia 19.1% $7,905 $19,172
3 Rhode Island 18.1% $6,233 $16,947
4 Vermont 17.2% $5,905 $20,468
5 Florida 15.4% $6,585 $18,885
6 Tennessee 14.6% $7,616 $18,490
7 Michigan 14.3% $7,269 $19,127
8 Massachusetts 14.1% $7,942 $20,296
9 (tie) Illinois 14.0% $7,404 $19,450
9 (tie) Maryland 14.0% $7,221 $16,904

Consumers across generations are less likely to have auto debt if they have student debt

Though debt distribution changes by generation, members from each generation analyzed are less likely to have auto debt if they have student debt. Gen Xers have the largest disparity between the percentage of consumers in that age range with auto loans (49.5%) and student loan borrowers with auto loans (24.9%).

Millennials (ages 25 to 40) trail just behind with 24.5% of student debtors owing on vehicles.

Percentage of consumers with auto loans and student loans, by generation
Gen Z Millennial Gen X Baby boomer
All consumers with auto debt 31.6% 45.6% 49.5% 43.0%
Student loan debtors with auto debt 17.0% 24.5% 24.9% 22.9%

Gen Z consumers — ages 18 to 24 — with student debt are the least likely to also have auto debt, but their median auto loan balances aren’t far off from other generations. Gen X has the highest median auto loan balance among both all consumers with this type of debt ($19,223) and those who also have student debt ($14,938). But Gen Z student debtors owe a median of$13,300 on auto loans, just about a $1,600 difference from Gen X borrowers.

Across generations, all borrowers with auto debt owe an average of $2,871 more on their auto loans than those who also have student loans. Gen X features the largest disparity — $4,285 — between median auto loan balances for all consumers and those with student debt.

Median auto loan debt for all consumers and those with student debt, by generation
Gen Z Millennial Gen X Baby boomer
All consumers with auto debt $14,620 $16,658 $19,223 $16,850
Student loan debtors with auto debt $13,300 $14,089 $14,938 $13,540

Auto debt outsizes student debt in McAllen, Texas

In more than half of the 101 largest metros by population, the share of student loan borrowers with auto debt outsizes the national average of 23.7%. Worcester, Mass., features the largest share of student debtors with auto loans at 34.1%.

The auto debt to student debt ratio in these 101 metros ranges from 46.4% in Durham, N.C., to 123.8% in McAllen, Texas, where dual-borrowers have the biggest disparity between median balances. Student loan borrowers in McAllen owe a median of $16,100 on their vehicles, compared with $13,001 on their school debts.

Every other metro examined reports a higher median student loan balance than auto loan balance among borrowers with both. Three California metros — Stockton, Fresno and Bakersfield — follow McAllen with the highest ratios, all exceeding 90%. San Jose and Riverside join the mix, giving California half of the 10 metros with the highest ratios.

Metros with highest auto debt to student debt ratios among borrowers with both
Rank Metro Percentage of student loan debtors with auto debt Median student loan balance Median auto loan balance Auto debt to student debt ratio
1 McAllen, TX 25.6% $13,001 $16,100 123.8%
2 Stockton, CA 26.3% $15,445 $14,092 91.2%
3 Fresno, CA 23.1% $15,300 $13,886 90.8%
4 Bakersfield, CA 27.3% $15,707 $14,202 90.4%
5 Cape Coral, FL 29.7% $17,784 $15,579 87.6%
6 San Jose, CA 18.3% $16,703 $14,455 86.5%
7 Provo, UT 25.0% $15,842 $13,643 86.1%
8 Des Moines, IA 26.5% $18,960 $16,050 84.7%
9 Riverside, CA 26.8% $18,354 $15,428 84.1%
10 Knoxville, TN 28.7% $20,248 $16,931 83.6%

Conversely, consumers in the Carolinas appear to owe more on their student loans as South Carolina contributes three metros to the 10 with the lowest auto debt to student debt ratios. Durham, N.C., takes that title with its 46.4% ratio.

The highest median student debt balance — $29,947 — of all metros analyzed helps keep Durham’s auto debt to student debt ratio so low. The lowest median auto debt — $11,299 — crops up in Ogden, Utah, which ranks 10th-lowest for its ratio.

Metros with lowest auto debt to student debt ratios among borrowers with both
Rank Metro Percentage of student loan debtors with auto debt Median student loan balance Median auto loan balance Auto debt to student debt ratio
1 Durham, NC 19.4% $29,947 $13,884 46.4%
2 Detroit, MI 25.5% $22,933 $11,998 52.3%
3 Augusta, GA 20.3% $27,632 $14,621 52.9%
4 Charleston, SC 22.0% $24,674 $13,080 53.0%
5 Columbia, SC 20.7% $26,065 $13,876 53.2%
6 Washington, D.C. 18.9% $26,657 $14,365 53.9%
7 Toledo, OH 29.4% $23,436 $12,658 54.0%
8 Greenville, SC 25.7% $24,006 $13,143 54.7%
9 Atlanta, GA 19.9% $26,710 $14,795 55.4%
10 Ogden, UT 23.1% $20,371 $11,299 55.5%

States with highest auto debt to student debt ratios don’t align with metros

Despite California’s representation among metros where auto debt to student debt ratios are highest, the state’s ratio ranks 18th. Wyoming takes the top slot with an 89.2% auto debt to student debt ratio among borrowers with both types of debts. A sizable 30% of Wyoming’s student loan borrowers — who have the lowest median balance in the country at $17,697 — owe on auto loans as well, with a median balance of $15,784.

Louisiana’s auto debt to student debt ratio trails Wyoming by just 3.2 percentage points at 86.0%. Arkansas has the highest median auto loan debt of all the states at $16,376 among student loan borrowers, helping it rank third for the highest proportion of auto to student debt.

States with highest auto debt to student debt ratio among borrowers with both
Rank State Percentage of student loan debtors with auto debt Median student loan balance Median auto loan balance Auto debt to student debt ratio
1 Wyoming 30.0% $17,697 $15,784 89.2%
2 Louisiana 24.4% $18,667 $16,062 86.0%
3 Arkansas 25.3% $19,073 $16,376 85.9%
4 Nevada 24.8% $18,269 $15,097 82.6%
5 West Virginia 26.0% $19,236 $15,643 81.3%
6 Montana 22.5% $18,296 $14,743 80.6%
7 Oklahoma 24.5% $19,732 $15,783 80.0%
8 Nebraska 27.1% $18,006 $14,361 79.8%
9 Texas 26.3% $19,966 $15,803 79.1%
10 Alaska 19.3% $19,015 $14,867 78.2%

Like the metros, states with high median student debt balances tend to have the smallest auto debt to student debt ratios. Maryland’s 56.5% ratio ranks as the lowest in the nation due in part to its second-highest median student loan balance of $25,273.

Michigan’s lowest-in-the-nation median auto loan balance of $12,373 among student borrowers helps the state rank second for the lowest ratio. Georgia has the highest median student loan balance — $25,462 — among dual-borrowers, contributing to its placement as the third-lowest ratio.

States with lowest auto debt to student debt ratio among borrowers with both
Rank State Percentage of student loan debtors with auto debt Median student loan balance Median auto loan balance Auto debt to student debt ratio
1 Maryland 22.0% $25,273 $14,281 56.5%
2 Michigan 25.3% $21,798 $12,373 56.8%
3 Georgia 19.9% $25,462 $14,857 58.3%
4 South Carolina 22.1% $24,008 $14,192 59.1%
5 Minnesota 23.1% $21,788 $13,060 59.9%
6 Virginia 20.9% $23,601 $14,174 60.1%
7 Ohio 27.4% $21,868 $13,305 60.8%
8 Massachusetts 26.7% $20,498 $12,498 61.0%
9 New Jersey 26.6% $20,964 $12,937 61.7%
10 Pennsylvania 28.9% $21,584 $13,533 62.7%

No matter how much you need to borrow, compare auto loan rates to get best deal on vehicle purchase

Though student loan rates are generally tough to negotiate — federal interest rates are set by the government — consumers have a bit more power to find a deal when shopping for vehicle loans.

If you’re shopping for a new or used car, use these tips to minimize your auto debt:

  • Shop around. Before you head to the dealership, explore your options for vehicle financing through banks and credit unions. Applying for multiple lenders won’t hurt your credit score if you apply within a 14-day window. But take the best offer you get to your auto dealer and ask them to beat it. “Dealers work with multiple lenders all day, every day,” Jones says. “They can likely find an even lower rate for you.”
  • Get a preapproval. Jones advises that those lender preapprovals are vital to negotiating with car salespeople. “As the middleman, dealers can frequently raise consumer auto loan APRs by two percentage points,” she says. “Know the rate you qualify for before you walk on the car lot.”
  • Take advantage of financing rebates. Even if you have the cash to buy a car outright, manufacturers may offer rebates for financing directly through them that could mean extra savings for you. “If you could get a $2,500 rebate for financing a vehicle with the manufacturer, it would be smart to finance it, get the rebate and then pay it off the next month,” Jones says.

Methodology

Using more than 343,000 anonymized credit reports of student loan debtors, analysts calculated the following in all 50 states, the 101 largest metropolitan areas:

  • Median student loan debt
  • Percentage of student loan debtors who also have auto loan debt
  • Median auto loan debt among those who have it
  • Percentage of borrowers who have more auto debt than student debt
  • Auto debt to student debt ratio

We defined the four major adult generations (via the Pew Research Center) as the following ages in 2021:

  • Generation Z: 18 to 24
  • Millennial: 25 to 40
  • Generation X: 41 to 56
  • Baby boomer: 57 to 75
 

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