Close Your Wallets for Once

Adding to the subprime mortgage mess, some experts are saying that automobile debt could lead to further problems in the credit markets with more Americans signing on to extreme amounts of debt that do not fit in well with their finances. A growing trend is for auto loans to last under longer terms than what has normally been the case as more people purchase luxury vehicles or just vehicles that they can't afford.

According to the Federal Reserve, the average car loan was five years and four months in October, a six-month increase from 2002. Approximately 45 percent of the car loans today are longer than six years. In addition, terms are beginning to creep up with lenders such as Toyota Financial Services and Ford Credit beginning to offer seven-year loans and some lenders looking into eight-year loans.

The only problem with this scenario? A lot of the blame for all of this debt is being extended onto the deals and the creditors. However, when are consumers going to start realizing that living beyond their means is a personal choice that they have made?

It is the buyers who make the choice to purchase items on credit. Yet, we continue to hear news stories of people we are made to feel sorry for because they are in a deep hole of credit debt leaving them in over their heads. And the common response is always, "Well, we didn't know" or "the dealer/lender never said anything about this happening."

Anyone who understands the basic concepts of credit debt knows that any sort of debt is a dangerous slope and that if not paid off right away, the finance charges skyrocket. This is why, the blame placed on creditors for the current state of the credit market, is not entirely deserved. Consumers should at the least accept partial responsibility for not doing the research and crunching the numbers on their own financial makeup.

According to the Fed, the average amount of financing is $30.738, an increase of $3,500 from October of last year and up 40 percent in the last 10 years.

Not only that, but consumers have average debts that are $4,221 more than what the car they currently own is actually worth.