Would You Go Nude To Ditch Your Car Loan?
What would it take for you to go to work naked for a whole day?
Yes, it’s a total hypothetical. But let’s be real about this and really play out the full scope of what that would be like.
Feel your heart pounding as you contemplate that first horrifying step out of your car. Listen to yourself later as you explain the whole, clearly miscalculated gambit to your frontline supervisor and whatever HR special forces operator gets called in to handle a situation like yours.
Would all of this torture be worth a million dollars to you? Two million?
Well, for one in three Americans, the answer is less than that. Like, a lot less.
In fact, 34 percent of people reported that they would spend a day naked at work if they could escape five years of payments on their auto loans. And with the average car loan now stretching out over almost six years, that means one-third of Americans would essentially agree to ruin their careers—and risk some seriously painful morning coffee burns—for less than the sticker price of the car they’re driving right now.
We know this because more than 2,000 people were recently asked this question in a Fair-sponsored Harris Poll survey that was conducted last month to find out if people in the general public have as dim a view of car loans as we do here at Fair.
The verdict? They do. And with good reason.
We’ve written before about the bad financial bet that an auto loan represents. At the end of 2018, more than 7 million Americans were reported as being 90 or more days behind on their auto loan payments. And while our $1 trillion in credit card debt seems to get all the headlines, our $1.27 trillion in outstanding auto loan debt now easily surpasses that.
Just check out this segment on auto lending from comedian John Oliver on HBO’s Last Week Tonight. Among other jaw-dropping injustices, it tells the story of a high-mileage Kia Optima that was sold and repossessed by the same company eight times in three years—each time sold at double or triple its value.
While that’s an extreme case, it does illustrate the larger truth that it is risky to tie your credit up for six years (the length of the average car loan) for an asset that will consistently lose almost all its value over time—all while betting you’ll have no employment blips or situation changes during that entire time that could affect your ability to pay.
True, people are willing to make a bet like that when financing a house. But that’s because a house will generally go up in value, barring a housing market downturn.
Unfortunately, the Fair-Harris poll survey found that the current auto finance system is causing a lot of unnecessary stress for a lot of these very reasons. In fact, more than half of Americans who’ve had auto loan debt (52 percent) say it has caused them to sacrifice vacations and travel plans. Fully 42 percent of those surveyed reported being stressed due to auto loans, while 47 percent said auto loan debt has taken away some of their peace of mind. And 36 percent of Americans said that having auto loan debt is more stressful than finding a new job.
The problem is even more extreme for Millennials and younger consumers. The study found that nearly half of Millennials who purchased a vehicle (49 percent) said auto loans have caused them stress, compared to 35 percent of vehicle buyers aged 55 or older. Millennial auto loan debtors were also found to be more than four times more likely—28 percent to 6 percent—than those aged 35 or older to report negative impacts on their romantic relationships/sex life due to auto loan debt.
While the study offers plenty of reasons to dread the impacts of auto loan debt, it did reveal a shimmer of good news. Namely, people are beginning to recognize the many dangers of a car loan—and said they would even take extreme steps to avoid one. Three in 10 Americans said they would give up social media for life if it meant they never had to make another auto loan payment again. Meanwhile, 24 percent said they would give up coffee, and 22 percent would give up streaming services. And that’s before the final season of Game of Thrones even hit HBO Go. So you know it’s serious.
For a full view of all the ugly ways auto loan debt is impacting the psyches of Americans, you can check out the poll results here. But suffice it to say, all of the data is further proof that our goal at Fair of reducing auto loan debt with a flexible, no-loan way to drive a car is well worth pursuing.
Fact is, having access to a reliable car shouldn’t be complicated, expensive or stressful. It should be just like all the other services you order up on your phone: simple, flexible—and without ever causing you to consider coming to work without your clothes.
Because that is an objectively terrible idea on every level.