Americans more likely to skip mortgage or credit card payment than car payment

[SSLByron]

Americans Prioritize Car Payments Over Everything Else

NEW YORK (AP) — The recession and its hangover may have turned bill-paying habits upside down. Cash-strapped Americans are paying off their car loans before they pay credit card bills and make mortgage payments, a study finds.

It used to be that Americans would pay their home loans first, then their credit card and car loans. After all, homes have been the most valuable possession for most people for decades, and nobody wanted to jeopardize that.

But TransUnion, a credit information company, 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.

Among Americans who were late on payments last year, 39 percent were delinquent on the mortgage while current on the car loan and credit cards, and 17 percent were late on credit cards while current on the other two.

Only 10 percent were late on the car loan while current on the other two. When TransUnion first did the study in 2006, staying current on the mortgage was the priority, says Ezra Becker, the company's vice president of research and consulting.

"Today, most people need a car to get to a job or to look for a job, and that has made cars a priority," he says.

It hasn't helped that home prices keep falling while the mortgage remains by far the biggest payment for most people. The latest Standard & Poor's/Case-Shiller home price index found that prices in big cities had fallen to 2002 levels, down 34 percent from the peak.

There is also more leeway on the mortgage. Foreclosure can take two to three years. Cars can be repossessed 90 days after people stop paying.

Matt Saxton of Columbia, Md., was not surprised by the study's results. Saxton is on unpaid medical leave from work, recovering from spine surgery and relying on his savings.

Saxton says he dares not be late on his car payment and risk having his car repossessed. Instead, he's decided to be late on his credit cards and student loans.

"I can work with the credit card companies. They won't shut off or take away anything," says Saxton, who made a $474 payment this week. "I won't have the ability to get to work or even get another car if they repossess this one."

Original: http://www.businessinsider.com/ameri...#ixzz1qWD1eGEx

[2.0T_Convert]

Doesn't that make sense?


A credit card payment can ding your credit and you will start getting calls/fees on the next bill. I don't think you can be evicted right away in case of missing mortgage payments.

But with the car.. miss a few payments and the repo man comes to collect no questions asked.

[1Point8TDan]

I think its hard to live in N. America w/o a car but finding a place to rent is easier if you get evicted out.

[MotownSVT]

I think they're just afraid that the big bald Stone Cold Steve Austin wannabe dude and that fat slob chick are gonna come after them if they don't pay the car note...

[IJM]

Reminds me of a friend of mine. He walked away from his mortgage more than a year ago and now wants to buy a new Taurus SHO. Yeah, good luck getting a car loan, buddy.

[compy222]

the penalties for missing a CC payment or car payment are stiffer than missing a mortgage payment. in my work i've seen cases of people living in homes they haven't made a payment on for 1-2 years. in comparison missing a few months of car payments mean the car is going bye-bye.

[PsyberVW]

Banks won't tow a house. Usually.

*Trailers, Mobile Homes, Modular Buildings, excluded.

[adrew]

Also, car payments are typically much smaller than a mortgage or the typical American's credit card payments.

[PSU]

I think they're just afraid that the big bald Stone Cold Steve Austin wannabe dude and that fat slob chick are gonna come after them if they don't pay the car note...

I'd scream for help if she showed up on my door step.

[zaYG]

You can live in a car, but you can't drive a house.

[PsyberVW]

Also, car payments are typically much smaller than a mortgage or the typical American's credit card payments.

Maybe, maybe not.

I knew kids with $1300 car payments and $750 mortgage, and $200 cc payments.

Would be nice to say "it was just this one guy" - but there were quite a few of them.

[abeR]

people need cars to work, they can live with relatives and avoid paying student loans easily.

car payments can be much lower than mortgage or CC payments.

as stated above.. Im not sure why this is suprising.

[MotownSVT]

I'd scream for help if she showed up on my door step.

Whole lot of good that'd do... she'd tear the door off of the hinges and then eat all the leftovers in your fridge while the little dude rummaged around for your keys.... all while you're curled up in the fetal position with your thumb in your mouth like Lloyd Christmas in the bathroom stall after Sea Bass kicked the door in.

[Dave Zero]

Your house value drops 50% and they tell you that all your payments for 15 years mean nothing now and you actually owe more than it's worth.

A machine that has been there for you through your troubles and starts every day and is a known value. It shelters you from the rain and gives enjoyment like the home, but it is also much more.

[dcmix5]

Reminds me of a friend of mine. He walked away from his mortgage more than a year ago and now wants to buy a new Taurus SHO. Yeah, good luck getting a car loan, buddy.

Reminds me of a guy I work with, who is about the dumbest idiot I have ever seen regarding money. He defaulted on his mortgage, but somehow has the funds to buy a new iPad. He declared bankruptcy a few years ago, but somehow has the funds to buy a new 50+ inch LCD TV.

[roadtripper]

in other news, people are more likely

to pay their cable bill than their doctor bill
to pay their cell phone bill than their property tax bill
to pay their landscaping bill than save for kid's college
to pay for mcdonalds than contribute to their IRA
to pay for 22 inch rims than for preventative maintenance

there are virtually no short- to mid-term consequences for people ignoring their mortgage. if they are that far gone financially, they don't likely have much of a credit rating (or dignity) to protect. people that live hand to mouth live hand to mouth. only by limiting their reach will you curb their appetite.

we need to impose measurable consequences for poor life choices if we want people to behave responsibly. but that i suppose is scary to god fearing freedom lovers.

[Dave Zero]

In many Arab countries, Dubai for instance, debt will land you in jail, not just a bad credit rating.

This leads to the abandoned supercars in Dubai.

People go bankrupt and have to flee the country.

I'm glad it's not like that here. That is part of the reason we rebelled against England. People being jailed for not paying their debts (taxes).

[abeR]

you can still go to jail over a debt.
have a Judgment against you and miss a court date for a rule to show cause- the sheriff will pick you up on a body attachment. and you have to bond out.

- the more you know!

[SSLByron]

Also, car payments are typically much smaller than a mortgage or the typical American's credit card payments.

Minimum payments on a credit card are tiny. That's why Congress mandated that CC companies tell you on every bill how long it would take to pay off your balance if you only make the minimum payment each month.

[abeR]

Minimum payments on a credit card are tiny. That's why Congress mandated that CC companies tell you on every bill how long it would take to pay off your balance if you only make the minimum payment each month.

rack up 20 grand and your minimum payment is not tiny. many, many people are in this situation.

oy.

loose your job, have some unexpected medical expenses... need a roof... things happen. people are not ready and easily put these on a credit card.

[Dave Zero]

you can still go to jail over a debt.
have a Judgment against you and miss a court date for a rule to show cause- the sheriff will pick you up on a body attachment. and you have to bond out.

- the more you know!

I'm glad I don't know about this.

This is scary to me. I have heard you can be jailed for missign child support, but not common debt.

[Uberhare]

Reminds me of a friend of mine. He walked away from his mortgage more than a year ago and now wants to buy a new Taurus SHO. Yeah, good luck getting a car loan, buddy.

Good example of what's wrong with this country. People spending more than they can afford. What's wrong with saving up, paying cash for a $2000 car and saving up more to afford buying a new car in the future?

Oh that's right....we've been brainwashed to believe you must go into debt to buy something. Worship at the alter of FICA. If you don't have a +700 credit score you're nothing. It's sad and troubling. Having a good credit score actually means nothing other than you're good at pyaing back loans. It does not mean you're rich or good with money.

The borrow is slave to the lender. Remember that.

*stepping off the soapbox*

[IJM]

rack up 20 grand and your minimum payment is not tiny. many, many people are in this situation.

The minimum payment on a $20k CC debt is still tiny compared to the $20k balance.

[abeR]

I'm glad I don't know about this.

This is scary to me. I have heard you can be jailed for missign child support, but not common debt.

jailed till you are bailed out.. then you have to show @ court.

I work in asset recovery - this happens

[Dave Zero]

Good example of what's wrong with this country. People spending more than they can afford. What's wrong with saving up, paying cash for a $2000 car and saving up more to afford buying a new car in the future?

Oh that's right....we've been brainwashed to believe you must go into debt to buy something. Worship at the alter of FICA. If you don't have a +700 credit score you're nothing. It's sad and troubling. Having a good credit score actually means nothing other than you're good at pyaing back loans. It does not mean you're rich or good with money.

The borrow is slave to the lender. Remember that.

*stepping off the soapbox*

Yeah, all that is true, but if I saved 30 years to buy a house, I would be 65 with no house, finally buying it with cash, too old to enjoy it.


Same with a car, it basically sets your whole life back five years on the level of fine cars you will own by paying with cash. You will essentially be five years behind the curve of your friends who finance.

Also cash burns a hole in my pocket when I have it. Having a structure of debt makes me more responsible for organizing my finances in a sick way.

I don't want to die on a pile of money, I want to die owing on everything I own and prepared so as it does not effect my family who live after me. The house is covered against death to just hand to her and they can come tow whatever toy I am currently financing or they can tow it up the cliff after the fiery wreck.

[SSLByron]

rack up 20 grand and your minimum payment is not tiny. many, many people are in this situation.

It's smaller than the payment on a 60-month, $20k car loan. Significantly smaller, when you consider people with debt issues are probably not throwing in down payments and are facing high interest rates on auto loans.

[abeR]

The minimum payment on a $20k CC debt is still tiny compared to the $20k balance.

you are correct. but that's not the point.

2% of 20grand is $400

which for somebody having problems making ends meet is an issue.

[Southern Jetta]

You can probably qualify for goverment assistance if you're behind on your house note. You're not going to find much assistance for car loans and credit cards.

[Late Apex]

Gotta love capitalism

[Fe2O3]

Doesn't that make sense?


A credit card payment can ding your credit and you will start getting calls/fees on the next bill. I don't think you can be evicted right away in case of missing mortgage payments.

But with the car.. miss a few payments and the repo man comes to collect no questions asked.

In addition, why would you prioritize a mortgage if falling prices have wiped out your equity?

[PsyberVW]

I'm glad I don't know about this.

This is scary to me. I have heard you can be jailed for missign child support, but not common debt.

You're not jailed for the debt - but for failure to appear.

[Dave Zero]

You're not jailed for the debt - but for failure to appear.

So if you show up and tell the judge you are broke, they let you go? Why couldn't you just express your brokeness is written correspondence?

[PsyberVW]

Good example of what's wrong with this country.

The borrow is slave to the lender. Remember that.

*stepping off the soapbox*

There are good debts and bad debts - not all debt is created equal...

One huge benefit to borrowing money is that you can use to buy something TODAY that will only cost more tomorrow. Instead of chasing the price - like in the "save for 30 years to buy a house" example above (in which, after 30 years, he could probably afford 1/3 of the house he could today with the same amount of money) -- the borrower can make the claim now and lock in the price and interest rate - beating inflation and appreciation.

Especially in the event where monthly "rent" and "mortgage" are the same, if not in favor of "mortgage".

(this only because the housing example was given in the post above.)

But to your point - spending $65k on a $48k car when you have $2k in savings is probably going to be a rough ride.

[SSLByron]

Especially in the event where monthly "rent" and "mortgage" are the same, if not in favor of "mortgage".

(this only because the housing example was given in the post above.)

Bingo. That's why we bought. Why pay $1500 a month to a landlord when you can put it into something that you can at least partially recoup later?

[PsyberVW]

So if you show up and tell the judge you are broke, they let you go? Why couldn't you just express your brokeness is written correspondence?

If they show up with a subpeona, it's usually because you did not reply to their written correspondence.