All recessions begin when consumers take on too much debt and businesses extend too much credit. Borrowing money to buy a car is a doubly negative experience: the consumer goes “on margin” to own an asset guaranteed to lose value. Long after the joyful smell of new leather has faded, the payments will continue, continue, continue…
07-04-2017, From Market Watch, “Car buyers stretch loan payments to record lengths to get in pricier vehicles” by Rachel Koning Beals. READ THE ARTICLE
As car buyers’ obsession with bigger, pricier vehicles grows, so does their willingness to take longer to pay for them, says new analysis from Edmunds.com.
The average auto-loan length reached an all-time high of 69.3 months in June. That’s 6.8% longer than five years ago, said the site that provides auto industry statistics and news.
The average amount that buyers financed was hit with the biggest uptick for the year last month, at $30,945, or up $631 from May. The financing trend also lead to the highest monthly payments for the year, now averaging $517, which increased from $510 in May.
