The Seven-Year Auto Loan: America's Middle Class Can't Afford Its Cars
Comment of the Day

October 02 2019

Commentary by Eoin Treacy

The Seven-Year Auto Loan: America's Middle Class Can't Afford Its Cars

This article by Ben Eisen and Adrienne Roberts for the Wall Street Journal may be of interest to subscribers. Here is a section:

Just 18% of U.S. households had enough liquid assets to cover the cost of a new car, according to a Wall Street Journal analysis of 2016 data from the Fed’s triennial Survey of Consumer Finances, a proportion that hasn’t changed much in recent years.

Even a conservative car loan often won’t do it. The median-income U.S. household with a four-year loan, 20% down and a payment under 10% of gross income—a standard budget—could afford a car worth $18,390, excluding taxes, according to an analysis by personal-finance website Bankrate.com.

Eoin Treacy's view

Tesla is likely to introduce a car with a battery capable of lasting for one million miles of driving. Having a car for long enough to come close to even a fraction of that distance could justify taking out a seven-year loan to fund the purchase but that misses the point. The aim is for those batteries to go into autonomous vehicles.

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