A lot of Americans are in debt. You might be among them. And the borrowing is for just about everything – school, a home, even a car. New loans for cars and light trucks have surpassed $1 trillion dollars for the first time, according to a recent report from the New York Fed. And access to cheap credit is changing the way Americans think about their automobiles.
We’re not only taking out loans to buy new and used cars, we’re also taking those loans out for longer — more than five and a half years. Jessica Caldwell, director of industry analysis at Edmunds.com, says folks are treating cars more like a commodity — almost like a smart phone. “You’re gonna have your monthly payment and after a few years, you’re going to trade it in for something a little bit nicer.”
“A lot of buyers right now are coming in with less credit history and less cash,” says Alan Baum, principal at Baum and Associates, an automotive marketing research business. “The buyers that we’re seeing coming into the market that might not have been in it previously are going to need either a larger loan, or a loan with a longer term, or both.”
Baum says that longer loans mean you’re probably not going to be in the market for a car as often, something automakers don’t like to hear, because that means this car buying boom might not be around for much longer.
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