Americans Paying Off Car Loans Before Mortgage, Credit Cards

Derek Kreindler
by Derek Kreindler
americans paying off car loans before mortgage credit cards

Among all the loans being held by Americans, car notes appear to have lower delinquency rates, according to a report by the Associated Press.

Speaking with TransUnion, a credit information agency, the AP found that

39 percent were delinquent on the mortgage while current on the car loan and credit cards, and 17 percent were late on credit cards while current on the other two.

Only 10 percent were late on the car loan while current on the other two.

Back in 2006, respondents said that paying their mortgage was the financial priority. Six years later, priorities have changed. While foreclosures typically take a fair amount of time to occur, cars can be repossessed after 90 days of non-payment. Cars are also needed to get to work in many cases, and owners may not be able to get another vehicle after the bank repos their ride. Banks and credit card companies are also more flexible when it comes to negotiating some kind of payment schedule or re-financing – but a “buy here, pay here” lot? Not so much.

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  • Caboose Caboose on Mar 29, 2012

    In other news: Dave Ramsey beams his alien brainwaves into the skulls of the TTAC B&B. Early reports indicate they may have been lured into the car- and prosperity-hating cult with promises of "no debt" and "Suze Orman naked".

  • Panzerfaust Panzerfaust on Mar 29, 2012

    The de-motivational poster reminds me of a trailer house near where I used to live. The resident owned a 2007 Ford Excursion, which was almost as long as the trailer, taller and without a doubt ten times its worth.

  • DenverMike DenverMike on Mar 29, 2012

    Home ownership is overrated I'll agree, but I'm talking ownership, free & clear. I found a rat hole on 2 acres in the nicer part of town. It wasn't for sale per se, but I convinced its owner to sell and carry the note. Ten thousand a month with zero interest and zero down for 12 months. That was 12 years ago and although my income is way down, I can still afford a new pickup every 5 years because of it and have a couple other houses I've bought since by not giving a third of my pay check the fricken lending institutes (of any sort).

  • Krhodes1 Krhodes1 on Mar 30, 2012

    I am going to somewhat disagree with the arguments for not buying a house. If you are renting a house, in most markets you will be covering someone else's mortgage, insurance, taxes, maintenance, and in theory some profit as well. Now sure, you can rent an apartment for less SOMETIMES, but see the previous, and you get to deal with having other tenants around you. Real estate is too local to make sweeping generalizations though - in some places you can rent a house for less than you could buy that house. Not in Portland Maine though - I lived in a nice 2br apartment with off-street parking for 6 years from '95 to '01, the rent was $570/mo, utilities NOT included. Now that same apartment is $1500 a month! My mortgage on a bigger house with a HUGE garage is $1300/mo with taxes and insurance, and I get to deduct a huge chunk of it from my income for tax purposes. My marginal tax rate is pushing 50% (Fed and State), so that is a HUGE savings. Obviously, if I had a more average income there would be much less savings. I was lucky to buy pre-bubble though, so even with the slide in house prices, it is still worth 50% more than I paid for it. I certainly have friends who bought at the top of the market who are underwater. The mistake most people make is buying TOO MUCH house. The average size of a house in the US has more than doubled in the past 30 years. I don't get why people seem to think they need all that space. My 1200sqft is bigger than I need, even with a roommate I have two whole rooms that we don't even really use, a guest room, and one we use as storage and for our indoor hobbies. Either could disappear and not be particularly missed. Now the garage on the other hand, 3700sqft and it is too darned small, hence the addition. :-) Actually, the real problem is lack of ceiling hieght for a two-post lift - THAT is the real reason for the shop addition.