Cars and owners

When I went to buy a new car, to replace the aging horse that had served me well, I, like most Americans did not buy it cash down.  To get the loan approved, I had to get my credit checked.

The sales guy came back with the print out.  He had a huge smile on his face.

He sat down on this chair across from me, and slid the paper across and pointed to the credit score.

I asked him what that meant.

I remember his reply even now, almost a year later: "It means you can buy whatever you want at the best rates. That good."

But, of course, the party-pooping General Malaise that I am, I never buy whatever I want. 

Most Americans typically behave the other way around.  Despite their less-than-awesome credit histories, and not saving for the rainy days and years, they buy.  They buy big, and lots of it.  So much so that:

Car debt has risen 75 percent since the Great Recession in 2009, reaching an all-time high of $1.2 trillion, according to the U.S. Public Interest Research Group.

This is a worrisome piece of statistic.  It is a danger sign because "car buyers could run into trouble if the economy takes a turn for the worse and their income drops, especially because they’re locking themselves into long-term loans."

Consumers did a similar thing before the Great Recession--they bought homes that they could not really afford, betting that there will not be any downturn in the economy.  And when the economic conditions took a dive, well, you know what happened!

As the global economy seems to be slowing down, one should take a note of this: "More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession."

Imagine if the economy contracts over the next few months.  Jobs will be cut.  Paychecks will decrease.  But, the payments have to be made.  Or else.

The silver lining, if at all, is this:

The market for car loans is just a fraction of the size of the one for houses. “This isn’t going to be the next 2008,” said R.J. Cross, a policy analyst at the Frontier Group, a research think tank that co-authored the U.S. PIRG report. But these trends still spell trouble for individuals and families, and point to an enlarged economy pumped full of bad loans.

But, seriously, why can't people buy well within their affordable range?  They don't have to be General Malaise, but at least Major Buzzkill or, heck, even Captain Killjoy, right?