Mar 16, 2015
One half of all car loans were for six years or more – an all-time record for length. That’s what Bloomberg News reported. Auto companies and banks pushed long loans as a way to ramp up sales. After all, who can afford new car prices with wages so low? People fell for the spiels rolled out by dealers, hoping they could at least afford the monthly payments.
What no one told them was that after about two years on these super-long loans, they will owe more than the car is worth. Get in an accident that totals the car, and they’ll owe the bank, with no car left to drive. Try to turn the car in on a newer model, they’ll discover they have no money to put down.
As if that’s not bad enough, consider this: More than a million people took out a “car title loan” last year as a way to cover their other bills.
It’s a new bubble waiting to explode – this time with the potential to send our cars to the junkyard.
And it’s brought to you by the same bankers who dreamed up sub-prime mortgages!