According to a study led by consulting firm J.D. Power, a typical Canadian family’s personal debt reaches 152% of their disposable income. Why? Long-term car loans, for one.
In 2007, 6.4% of buyers took out loans longer than 6 years. Today, 40% are paying off loans of 6 years or more. Although this kind of loan might be attractive to buyers already in debt, it can wreak havoc on the family budget.
Plus, many buyers trade in their vehicle before paying it off. This further increases their debt load since they are carrying the remaining amount over to their new car. Meanwhile, automakers are happy to offer longer amortization periods, because they reap significant profits by getting vehicles back before loan terms are up.
Source: argent.canoe.ca
In 2007, 6.4% of buyers took out loans longer than 6 years. Today, 40% are paying off loans of 6 years or more. Although this kind of loan might be attractive to buyers already in debt, it can wreak havoc on the family budget.
Plus, many buyers trade in their vehicle before paying it off. This further increases their debt load since they are carrying the remaining amount over to their new car. Meanwhile, automakers are happy to offer longer amortization periods, because they reap significant profits by getting vehicles back before loan terms are up.
Source: argent.canoe.ca