It used to be that Americans would do anything they could to make their mortgage payments. Well, the housing crisis has decidedly changed that. A new report shows that Americans are prioritizing their car loans above their home loans.
TransUnion, a credit information company, recently studied the payment patterns of 4 million Americans with at least one car loan, one credit card and a mortgage — and found a clear priority for staying current on the car loan above all else.
Specifically, of those who fell behind on their payments 39% were delinquent on the mortgage while current on their car loan and credit card debt, while 17% were late on credit cards while current on both home and auto loans.
A mere 10% were late on their car payment while up-to-date on both credit cards and home loans.
When TransUnion dissected these habits back in 2006, the mortgage was the priority. “Today, most people need a car to get to a job or to look for a job, and that has made cars a priority,” Ezra Becker, the company’s vice president of research and consulting, told BusinessWeek.
It also probably helps that the average foreclosure taking over a year, so folks can keep a roof over their heads even if they aren’t making payments. Cars, on the other hand, will just get towed away if you miss a handful of payments.
There is also a lot of venom between borrowers and banks, so some consumers don’t feel bad about “strategic defaults” where they simply walk away and take a ding on their credit score just to get out from under a home that is worth far less than the mortgage.
And, of course, it’s always easier for a family with no wiggle room to come up with a few hundred bucks for the car than a thousand or two for the mortgage.