Tags: cars | loans | debt | payment

MarketWatch: Cars Come First in American Debtors' Hearts

By    |   Wednesday, 18 December 2013 01:13 PM

The bill most Americans pay first every month is not their mortgage or rent, or their credit cards or cable TV. It's their car loan, according to MarketWatch.

Never mind the fact that many financial planners and similar experts say that Americans’ love affair with their autos means they have their priorities wrong.

Steve Chauoki, group vice president at credit bureau TransUnion, said the 30-day delinquency rate for auto loans was 0.88 percent in 2012, but was higher for credit cards at 1.82 percent and for mortgages at 1.91 percent for those who owed money for all three assets.

Chauoki said autos are expected to come in first again this year in debtors’ affections.

“It’s a huge mistake to pay off the car first,” Ted Jenkin, a certified financial planner and founder of Atlanta-based financial services firm oXYGen, told MarketWatch.

Kimberly Foss, founder of financial planning firm Empyrion Wealth Management, said Americans should pay off necessities first.

“Pay for food and essential medical care, housing and related utilities, and transportation, in that order,” she said. “It’s about survival.”

TransUnion predicts auto loan debt per borrower will rise more than $1,000 from an estimated $16,942 in the fourth quarter of 2013 to $17,966 in the same period in 2014.

MarketWatch advised that consumers should try to pay at least the minimum when bills come due in order not to harm their credit score.

Jenkin recommended contacting creditors if a bill cannot be paid according to terms. “They are for-profit companies and they don’t want to get nothing. It’s better to call in advance and see if you can work something out. Just be sure to get it in writing.”

The Wall Street Journal reported record levels of auto loan debt are helping to drive a big increase in new car sales.

Experian Automotive, another credit bureau, estimated the total amount of auto loans outstanding for the industry rose to a record high $783 billion in the third quarter of this year, a 15 percent gain from 2012’s third quarter.

“In today’s market, rates are so low, people are choosing to finance more in order to make a purchase,” Melinda Zabritski, director of automotive credit at Experian, told the Journal.

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The bill most Americans pay first every month is not their mortgage or rent, or their credit cards or cable TV.
Wednesday, 18 December 2013 01:13 PM
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