Some types of debt seem inescapable. Tens of millions of American are saddled with mortgages, student loans, credit card debt or a combination of the three. But there’s another place where Americans also carry huge outstanding liabilities: in their garages. Cars are rivaling everything else in terms of debt bondage for everyday Americans.
The numbers are especially painful for lower-income households who have to spread payments out over longer periods, significantly raising the total cost of a loan. For the average borrower paying off a car loan longer than seven years, their payments add up to nearly 20% of their average monthly income for the lifetime of their loan.
“Historically high auto costs and interest rates are pushing record numbers of borrowers into longer term loans that raise the total costs of owning a car and keep households in debt,” the report’s authors wrote. “Paradoxically it is low-income borrowers, with the least disposable income, that carry the most auto loan debt.”
