Most borrowers pay their car loan with no problem. But in recent years, tens of thousands of consumers have found themselves in financial sinkholes after receiving high-interest, longer-term auto loans that put them at serious risk of default.
This is happening as total auto loan debt held by Americans has increased dramatically over the past 10 years, surpassing $1.4 trillion—more than the gross domestic product of Australia. Because of recently skyrocketing prices for new and used cars, that debt is likely to grow even more.
“You’re not helping somebody to get a car if the odds are they’re going to lose it,” says Kathleen Engel, research professor at Suffolk University Law School in Boston who studies subprime financial products and is also the vice chair of CR’s board of directors. “That’s not getting somebody a car. That’s taking their money.”
Read the article at Consumer Reports.