US Citizens Set Record Loans to Buy Cars

 Four-wheeled vehicles seem to have become a priority for people in the United States. CNN reports that in recent years, Uncle Sam's citizens have been recorded to carry out large transaction activities, both for cars and trucks.

However, they prefer to apply for a loan to have the vehicle of their dreams. A record was set with 107 million Americans in debt to buy a car, according to data released by the Federal Reserve Bank of New York.

With this number, if the percentage is 43 percent of the total adult population in the United States.

The loan is considered to have grown rapidly. In early 2012, only 80 million Americans had car loans. In fact, more Americans had home mortgages than car loans that year. But all that has changed.

In fact, currently the number of loans is more for cars than houses. Car sales continued to grow into 2016, although recently the buying frenzy has slowly come to an end. However, it helps manufacturers with their track record of vehicle sales.

The number of borrowers seems to be inversely proportional to their actual ability. It is estimated that only six million borrowers are able to pay off their vehicle loans in America. Of course, it is clearly dangerous to place them in the possession of a car or truck.

Beth Yeager has seen the downside of this auto loan boom. He helps run the Pathway of Hope program for the poor at the Salvation Army in Louisville, Kentucky.

According to him, many single mothers with children end up in the office in bondage. They can't pay off their car loans, but if they lose their car, they often can't work.

"This happens to poor people over and over again. Frustration is evident in his voice. He hates lots of cars with big banners that say things like 'Buy here. Pay here. Easy credit," Yeager told CNNMoney.

To him, a lot of people in America are low-income and don't understand and have never had credit. However, they were happy after being eligible for the car so they signed the paperwork. Though the interest rate is not yet known. Yeager routinely sees interest rates in excess of 20%.

"On someone's credit report, it impacts not only their ability to get another car, but also to get affordable housing," he said.

After the financial crisis, housing became hard to come by, but a loan to buy a car was easy. A "sub-prime" auto loan that is routinely extended to borrowers, without a good credit score. Low-grade lending jumped to pre-crisis levels in 2015 and 2016, according to Fed data.

"There's a human side to all these loans going bad," Yeager said.

She told me that a young mother of three children came to her for help earlier this year. Her youngest child was born with complications and required heart surgery. She lost her job while taking care of her child.

Yeager said the mother was faced with a decision whether to "continue to pay for the children's meals" or "pay for the car." The lady stopped paying for her car and it was repossessed.

Yeager tried everything, even Goodwill's "cars to work" program, but the black marks on his credit kept him from getting help. He walked to work for months before buying a "ugly" $1,000 car that broke down frequently. Yeager is still trying to figure out what else to do.