It’s good to see that the 2008 recession has failed to teach us any lessons. Many rosy-eyed procrastinators had been thinking that the recession, brought about too many people having too much debt, would serve as a stark reminder that debt can hurt for at least a generation or two. Turns out we Americans would much rather have new stuff than lives free of debt.
A clear indicator that this groupthink is the real deal is the recent report out of market research firm J.D. Power and Associates that found that nearly one out of every three car buyer these days is financing for 72-months. That is six solid years of car payments.
Though the 32 percent of car buyers taking out these lengthy loans is an all-time high in America, it is just a two percent increase over March of last year. Explaining that low interest rates are attracting people to these loans, John Humphrey, senior vice president of the global automotive practice at J.D. Power and Associates, said, “While longer loan terms have traditionally been a cause for concern to the industry due to the risk of purchase cycle extension, it is not necessarily as daunting as it may seem.”
In addition to the low interest rates, many buyers are willing to be tied to years’ worth of car payments since the average car of today lasts many more years than cars of yesteryear. So, in the end, the trend may not be as bad as it seems.