Car dealers around the country are giving car loans to people nearly the same way that banks were giving out mortgages before the housing bubble burst. As a result, there are many people who are on the verge of bankruptcy because they have more car payment than they could feasibly afford. Some people in New Jersey may be able to empathize with the man who was able to buy a car with a shotgun.
He didn’t hold the car dealer for ransom. Instead, he gave the shotgun to the dealership as $700 worth of his $1,000 down payment. This enabled the man to obtain a loan for a 2007 Suzuki Grand Vitara that came with a $324 per month payment. He was able to obtain the loan despite the fact that he had already lost one vehicle to repossession and had medical debt that was piling up.
Unfortunately, the man and his wife ended up divorcing. He had to file bankruptcy, and his wife took on the car payments. However, she may soon have to file as well. This man’s story could have taken place anywhere including New Jersey.
It is possible that the auto loan market could soon go the way of the housing market. Even as the economy is beginning to show signs of regeneration, there are still people struggling just to get by. New Jersey car owners are filing bankruptcy to finally conquer their financial situations. For some, it will be possible to keep the car with the big monthly payment, but for others it won’t be possible. However, in the end, everyone will have a fresh start.
Source: The Morning Sun, “How the Fed fueled an explosion in subprime auto loans,” Carrick Mollenkamp, July 9, 2013