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Americans Paying Car Loans, But Not Mortgages


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.

Article printed from InvestorPlace Media,

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