Monday, July 18, 2005

U.S. Consumer Debt Tops $2 Trillion

The Federal Reserve Board says that total U.S. consumer debt, excluding mortgages, is a staggering $2.02 trillion—an average of about $19,000 per household!

In addition to credit-card debt, new car loans account for much of this figure. Notice this report from USA Today: “New car buyers are paying more, making the lowest down payments ever and taking increasingly longer loans. … [C]onsumers seem determined to drive the newest vehicles for the lowest possible monthly payment.

“‘The new car market has been driven more by want than need for several years now …’ says Paul Taylor, National Automotive Dealers Association chief economist. …

“The average loan today is for 63 months, with some going as high as 80 months, compared with an average of less than 48 months five years ago” (February 17; emphasis mine throughout).

Last year, banks financed an average of 101 percent of a new car’s cost because consumers sought loans not only to cover the cost of the new car, but also the thousands more they owed on the old one.


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