More Americans Than Ever Are Driving Cutting Edge Technology




Bauguess, Scott W.

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August 6, 2020 More Americans Than Ever Are Driving Cutting Edge Technology SCOTT W. BAUGUESS Finance Published on October 11, 2019

My rewrite of the WSJ article: “The Seven-Year Auto Loan: America’s Middle Class Can’t Afford its Cars.“

Financial innovation is adding fuel to an industry that keeps raising the bar for what to expect from the driving experience. Walk into an auto dealership these days and you might walk out with a seven-year car loan.

Unlike the time it takes to digest chewing gum, seven years isn’t a myth. An increasing number of car buyers are electing to extend their payments. About a third of auto loans for new vehicles taken in the first half of 2019 had terms of longer than six years, according to credit-reporting firm Experian PLC. A decade ago, that number was less than 10%.

The Wall Street Journal recently published an article titled: “The Seven-Year Auto Loan: America’s Middle Class Can’t Afford Its Cars.” I tweeted that the same set of facts could have supported a more positive story. Here is my suggested rewrite. In many places, I preserve the authors’ original language. Read and compare.

The availability of inexpensive debt on increasingly generous terms is supporting auto industry sales and profits. For consumers, it’s become a crutch to support their expectations.

This is enabling more Americans than ever before to drive cutting edge technology. But not everyone views this as a positive development. Some suggest this is a pronounced sign that American middle class buyers can’t afford a middle-class lifestyle.

This view is based on the perception that incomes have risen at a sluggish pace in the past decade, while car prices have grown rapidly. Costly new technological and safety features, such as lane assist and larger and more sophisticated multimedia displays, are making their way to even the most basic cars. U.S. consumers have also veered toward pricier rides such as sport-utility vehicles that tend to dominate auto showrooms.

The result? Consumers are seeking bigger loans than ever to purchase a car. And the only way they can afford them is to stretch out the payments.



Promoting the relevance of academic research in the design, implementation, and evaluation of financial market regulation. Through events, analysis, and commentary, the program on financial markets regulation aims to elevate the role evidence-based decision making in the policy development process. Bringing the rigor of peer-reviewed research to decision-makers can mitigate the bias and conflicts that underlie many proposed regulatory actions, and lead to more balanced consideration of competing interests and perspectives among financial market participants. To achieve this, each initiative is focused on raising awareness of where evidence in support of financial market policy is needed, promoting regulator engagement with academic experts, and creating incentives for academics to apply their expertise to policy issues by measuring the relevance of their contributions to regulatory outcomes.

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