As in 2007-08, achieving peak auto sales this cycle has been a reckless, financially destructive chapter for the masses, and right on cue, the inevitable default phase has begun with losses coming back on financiers once more. Trustee in Bankruptcy, Scott Terrio reports from the front lines of the consumer debt bubble bursting in Canada, see: I can’t afford my car! What are my legal options?
“Overall vehicle costs can add up to 1/3rd or more of a person’s monthly living expenses, adding in loan/lease payments, fuel, maintenance & insurance. Two late-model financed cars can cost as much as much as $2,000/mo. when factoring in all real costs.
…Furthermore, two thirds of all financed cars in Canada are on terms of 72 months or longer. So Canadians are taking longer and longer to pay those cars (which end up worthless) off, meaning their cash flow is minimized for longer than ever.
Low interest rates have been a huge contributing factor to all this. Easy & cheap access to money, not to mention an increasing predilection toward leasing, have meant bigger & more expensive cars in the driveway to better keep up with those dastardly Joneses.
In our practice, we see people whose cars are killing their finances…Many of them ask what they can do to get out from under an onerous finance contract or lease. They’ve decided their car is costing them too much. So what can you do to get out of your car deal?”
The answer: either declare bankruptcy or file a proposal to restructure one’s debts. Either way the vehicles flow back to the financiers for fire sales and write downs.
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