ADAPT Apr 2020 / by ANNA ZECK  / Read original article

While it’s no surprise that advanced safety features in vehicles drive up the cost of car repairs, more information has come out in recent months detailing just how much of an impact those features make on cost—and the impact on consumers.

In a controversial Wall Street Journal article, “A $45,000 Loan for a $27,000 Ride,” in late 2019, the Journal took a look at the increasing trend of consumers taking out significant longs to pay for new vehicles—sometimes to the point that the debt exceeds the car’s value (referred to as “negative equity”).

According to Edmunds, 33 percent of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28 percent five years ago and 19 percent a decade ago. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans and rolling old debt into a new loan.

Those numbers illustrate affordability issues, says Susanna Gotsch, industry analyst for information provider CCC Information Services.

“As consumers have demanded more features and light trucks, the cost of the vehicles have risen,” Gotsch says. “It’s becoming much less affordable for people to buy a brand new vehicle, and that results in bigger loans.”


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