More Than Half of Americans Say Their Monthly Car Payments Are Enough of a Burden to Prevent Them From Making Big Ticket Purchases

ISLANDIA, N.Y., Nov. 5, 2004 -- More than half of Americans (56%) say their monthly lease and car payments are enough of a burden to prevent them from making other big ticket purchases, according to the Cambridge Consumer Credit Index. 17% of those with car loan payments say these loans are a major burden, up from 11% who felt so in 2003. 39% now say the loans are a minor burden, down from 44% a year ago. One reason that the level of burden has increased on many consumers is that average car payments have risen because of higher car prices. 17% of those with car payments are spending between $500 and $700 a month, up from 10% who paid that amount in 2003. 43% (down from 50% a year ago) are paying between $300 and $500 a month, while 32% (unchanged from a year ago) are paying less than $300 a month.

The level of pent-up demand for new vehicle purchases in the next six months remains similar to a year ago, with 8% of Americans very likely to buy a car (up from 6% in 2003) and 8% somewhat likely to purchase a new vehicle (down from 11% a year ago).

"The results of the Cambridge Consumer Index wildcard question show that car loans and leases are becoming a greater burden on Americans' budgets, since the price of cars has been rising, resulting in larger monthly car payments for many. These larger payments are becoming an increasing burden on consumers, restraining them from purchasing other large ticket items that they would like to buy," says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse. The overall Cambridge Consumer Credit Index rose by one point in October to 62. The Index rose on the question of taking on debt in the next month, but dropped in past month and next six months questions. The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, narrowed by 2 percentage point from October to 9 points. A month ago, 78% of Americans planned to pay off debt, while a month later only 69% actually did so.

"Consumers should be aware that their FICO score and debt-to-income ratio can directly affect what interest rate they will be paying when financing or leasing a car. We educate our clients to budget themselves properly, to pay their bills on time, and to pay down their debt. Following these steps should eventually improve a consumer's credit history, which is taken into consideration when applying for a car loan or lease," says Chris Viale, Acting President & C.E.O. of Cambridge Credit Counseling Corp.

In conjunction with the Index, the Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 432 people who answered, this was the order of their responses:

    1. I am frustrated with high bank rates and fees (32.4%)
    2. My income has been reduced from a lower salary, less overtime or
       layoff (30.1%)
    3. I want to improve my ability to achieve future financial goals like
       buying a house or saving for retirement (13.2%)
    4. I got into too much debt by overspending (7.6%)
    5. Other (5.8%)
    6. My lack of financial education caused me to take on too much
       debt (5.3%)
    7. Large medical expenses forced me to take on huge debts (3.5%)
    8. Recently divorced or widowed (2.1%)

For more information on the survey see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey

These findings of the Cambridge Consumer Credit Index are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse. The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.