Thursday, October 3, 2019

The 7-Year Auto Loan: America's Middle Class Can't Afford Its Cars



For the past few years, we've been addressing this issue on Auto Trends with JeffCars.com with our auto analysts, what is the tipping for these car prices. Every time we get behind the wheel of a new car, the sticker can easily range from $40,000 to $90,000 as if most of us can make those payments without batting an eye. However, according to this article that appeared in Wall Street Journal their finally echoing what we've been talking about, as the middle class is beginning to scream mercy.
Walk into an auto dealership these days and you might walk out with a seven-year car loan.

That means monthly payments that last well past when the brake pads give out and potentially beyond when the car gets traded in for a new one. About a third of auto loans for new vehicles taken in the first half of 2019 had terms of longer than six years, according to credit-reporting firm Experian PLC. A decade ago, that number was less than 10%.
Car loans that are increasingly stretched out are a pronounced sign that some American middle class buyers can’t afford a middle-class lifestyle.
Incomes have risen at a sluggish pace in the past decade, but car prices have grown rapidly. New technological and safety features, such as larger and more sophisticated multimedia displays, have made even the most basic cars more expensive. U.S. consumers have also veered toward pricier rides such as sport-utility vehicles that tend to dominate auto showrooms. The result is that consumers are seeking bigger loans than ever to purchase a car.
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