Phones are less expensive than a car, I get that, but here’s another bullet point to help illustrate the fact that more people are struggling to make their auto loan payments: Americans are prioritizing their phone bill over the car, reports Bloomberg.
Here’s the upshot (emphasis mine):
The sea change has taken place over the last few years as mobile devices become an integral tool not just for communication with loved ones or employers, but also everything from banking to dating to watching TV and listening to music. As cars grow relatively less important, borrowers struggling to pay back their loans on time are increasingly prioritizing payments on the latest iPhone instead of making sure they hold on to their pickup or coupe.
I can’t even tell if this is a conflation of two separate ideas jammed into a single thought—cars aren’t more important, but people are struggling to pay for their car?—but Bloomberg quotes the CEO of a company called PeerIQ, which analyzes and provides data for the consumer lending sector. He says his company’s research found that:
“Payment priority of cell phones is higher than personal and auto loans and similar to or slightly lower than that of mortgage,” Ram Ahluwalia, the chief executive officer of PeerIQ, a New York-based provider of data and analytics for the consumer lending sector, said in an interview. “Now with Lyft and Uber, you can access transportation via cell phone. The car no longer is a central asset. Technological change is driving shifts in consumer behavior.”
I think the point here is valid. But it’s not because the car is “no longer” a central asset. Millions of people need to get around for work and errands every day. Instead of this being a sign that record amounts for loan terms, loan amounts, and 90-day delinquent borrowers, Bloomberg frames this around a sign of opportunity for investors to consider purchasing securities backed by phone bills.
At some point this entire trend becomes an issue for the industry, right?