The nation’s total outstanding student loan debt balance has reached a staggering $1.1 trillion, according to the Federal Reserve, and that number may have negative implications for auto finance, according to Equifax chief economist Amy Crews Cutts. Student loan is the second-largest source of debt affecting U.S. households after mortgages. The large debt load, which is concentrated on younger borrowers, makes purchasing an automobile a more difficult decision, Cutts said. About one-third of student loan debt is owed by people under 30, while another third is owed by people aged 30 to 39.
“Our auto debt data provide some indication of the rates at which young consumers participate in markets for new and late-model used cars,” Cutts said. The bottom line is that when young people come out of college saddled with debt, they’re less likely to take on another $30,000 in debt to buy a new car. Cutts said auto lenders may need to help those new consumers figure out ways they can responsibly borrow money. “Young buyers will need to realize they can still buy a car,” she said.
