Look at all those huge shiny new pick up trucks and SUVs on the roads these days! Are Americans really that affluent? Not really.
How could it make sense to buy a $27,000 vehicle with a $45,000 loan? No I did not mix up the numbers as reported by AnnaMaria Andriotis & Ben Eisen on the front page of the November 11 Wall Street Journal. "Consumers, salespeople and lenders are treating cars a lot like houses during the latest financial crisis: by piling on debt to such a degree that it often exceeds a car's value"
Forget about envying your neighbors driving expensive new vehicles; it may be all debt and more! One-third of new vehicle buyers who traded in a car during first 9 months of 2019 had negative equity. On average these borrowers owed about $5,000 on their trade-in before taking on new debt.
"Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can lst seven years or longer." Don't get sucked in!
Did no one learn any lessons from the Great Recession?
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