Millennials And Gen Z Can’t Afford Their Auto Loans, And It’s Only Getting Worse
Millennials And Gen Z Can’t Afford Their Auto Loans, And It’s Only Getting Worse
Young Americans are up to their ears in auto debt, and the problem isn't going away.
On average, AutoNews reports that 3.58 percent of 18 to 29-year-olds and 2.62 percent of 30- to 39-year-olds have been late on their auto loans by at least 90 days. For some context, just 2.13 percent of all borrowers are late. Keep in mind, these numbers are overall. In the first quarter of 2023, 4.55 percent of 18- to 29-year-olds were at least 90 days late. 3.66 percent of 30- to 39-year-olds were equally late. We haven’t seen numbers like these since The Great Recession.
We cannot afford car loans not because car loans are expensive, but because we cannot afford anything.
Why not both?
The average American spends $1k a month per car on auto loans, insurance, gas, and other car-related expenses, and the average family has 2.5 cars per household.
Maybe cutting those down or out completely would make people more financially resilient. Of course, businesses should pay people better, too, but decades of studies have shown us that planning our cities in a way that increases car dependency is more expensive and unsustainable for everyone.
Not having a car in a city is feasible. It's much less feasible if you live in a rural or even sub urban location.
Inb4 "just move to the city then!?" Living in a city is typically significantly more expensive than rural or suburban areas. If they're already struggling financially, moving to the city probably isn't the answer.
Those numbers seem fishy or out of context, at the least. We have something like 300 million vehicles on the road in the US so there's no way the average car owner is spending $1k a month on loans. I'm assuming that statistic is only for new car buyers which make up a tiny fraction of drivers.
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This is as short sighted as saying purchasing on a credit card is stupid. There's a whole slew of reasons why financing something makes more sense than paying cash. Sure there's plenty of situations where financing is a poor choice, but to make that as a blanket statement is simply incorrect.