American consumers will be in debt after facing rising interest rates and high asset prices of their loans.
Transportation and housing lead people to have debt
Buyers of new cars and real estate might be better off waiting, but if they want the new car and house now, taking on a big monthly debt payment or stretching out the loan debt term are the options.
Americans can apply for new car loans that are payable up to 84 months, which rose to 34.4% of the market in 2022 from 28.6% in 2018, and few borrowers are going through their debt even longer, with less than 1% of new car loans that will last over 84 months.
Transportation and housing are significant problems for people, and to solve those problems, people will apply for loans that lead them to have debt forever.
Ultra-long loan debt terms are showing up in the housing and cars market.
Many dealers offered extended loan debt terms. Unlike before, a maximum of five years to pay the debt, but now they are going way beyond that. It’s the same thing with housing loans: Somewhat, the only way to get people into a house is to increase the mortgage terms.