Not that we need another sign that Americans are tapped out,but delinquency rates for car loans hit a 17-year high in the final quarter of 2007. Worse, it's estimated that about one-fourth of all car loans are "upside down," meaning that the owner owes more than the vehicle is worth.
This isn't entirely surprising, given how quickly cars depreciate. Still, it's clear that Americans have been buying more car than they can afford. And as with the housing bust, many people have been victims of predatory lending.
There's yet another parallel with the housing meltdown: real wage growth in America has been stagnant for nearly a decade, while the price of automobiles continues to climb, especially in the ways that you can add many thousands of dollars in options to your typical ride. The lending arms of car manufacturers are struggling to get people into new cars by extending the terms of the loan. The average today is nearly 64 months.
Is this a class war? After all, it's May Day. Read after the jump.
Europeans are feeling the same squeeze, if less dramatically. Bread riots sparked the French revolution. You have to wonder whether threatening phone calls about late payments on your Ford F150 could spark one here. As has been reported in this blog already, politicians are feeling the heat from drivers, and are shamelessly pandering to them.
Today's "New York Times" reports the little-known fact that tax payers pick up the costs for putting wheels under the U.S. House of Representatives. There are few limitations on the cars members can drive--or how much they can spend--and gas, registration fees, insurance and excess mileage charges are included in the benefit. Are you feeling like marching in the streets?
Suck it up and get back to work. The payment on your Yaris is due.
Photo: stevec77, licensed through Creative Commons
