In 2007, the housing bubble led to an international crisis: millions of people lost their homes. their jobs, and their life savings.
The cause? In short, banks gave out mortgages to people who could never possibly pay them back.
Today we face a similar threat. It has never been easier or cheaper to get an auto loan – even if you can’t really afford one.
Questions about filing for bankruptcy?
Since 2010, auto loans have risen 50% in the United States. In 2015, the auto loan market hit over $1 trillion for the first time. And there’s no sign of slowing down. This past week, Tesla received 276,000 orders in two days – what most car companies sell in a year – for a value of $10 billion.
Can we consumers afford all these brand new cars? Of course not.
Do we buy them anyway? Yes, in droves, using credit.
The auto loans coming out today are called “subprime” – the same word used during the housing crisis. It means loans that are made to people with bad credit, or to people who are at high risk of not making their payments and going into default. Those loans have risen by about 20% in the last four years.
So what does this mean for you?
If you have an auto loan or are looking to get a new car, chances are you may not be able to afford the car a dealership says you can. They may pressure you to take out a loan you won’t be able to pay back. As a result you could lose your credit and ultimately your car.
I always recommend people pay cash for their car whenever possible. But that isn’t what most people choose to do, and sometimes it’s impossible.
If you’re having trouble paying your car loan, contact me today. Our office has helped thousands of people get out of debt, keep their cars, and put their finances back in order. We can help you, too.