Americans Drive Cycle of Auto Debt

New cars tempt buyers into larger, longer loans that outlast the vehicle
By Sam Biddle,  Newser Staff
Posted Dec 31, 2007 9:25 AM CST
Americans Drive Cycle of Auto Debt
Americans are increasingly rolling their old debt into new cars, and new loans.   (Getty Images)

(Newser) – More and more Americans are entering a cycle of larger, longer, and far riskier auto loans, raising the possibility of a debt crisis similar to the one that has hit the housing market. The Los Angeles Times explores the increasing trend of trading in a used car for a new one—and rolling together old debt and new.

About 45% of new auto loans are now longer than 6 years, with the average amount reaching $30,738—a 40% rise this decade. And longer-loan terms mean many are paying balances that far exceed the value of the car. One finance exec says this recent American habit "is like a drug. Once you get hooked, it gets harder and harder to break the cycle." (Read more auto loans stories.)

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