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by mikeash
4130 days ago
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$886 billion in auto loans doesn't seem like very much to me. There are about 254 million passenger vehicles in the US, so that's an average of $3,500 in debt per car (of course there will be huge variation there). You pretty much need a car to live in many places in this country, and in many more places you need a car to have a decent job. Most people can't afford to buy one outright, and in a case like that, it's sensible to take out a loan in order to purchase an asset that allows you to immediately start making money to pay it off. Taking out a loan for a low-end car so you can drive to work is pretty different from taking out $50,000 in loans for a degree that you hope will let you find better work years in the future. |
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Most people I know, and what I also do personally, is buy a used car for less than $10k, and pay it off within 3 years. Then you live with it until it no longer becomes economically viable to keep it.
So my wife and I own our cars at this point, which frees $400+ a month we can put towards something else with the understanding in 2-3 years we will need to budget for cars again.
The basic cycle is 3 years of car debt, 3 years without.
(I don't live in an area which has public transportation)