Millennials (also known as Generation Y), those 21 to 34-year-old hold an estimated $1.1 trillion of the country’s $3.6 trillion in consumer debt. Rising student and auto loans are outweighing a decline in mortgages.
With all of the rising debt comes the risk of default. There is evidence that millennials are curbing their spending habits when it comes to smaller purchases, whether searching for the lowest price or waiting for the best time to buy.
But concerns over student loans and auto loans remain. A growing amount of auto loan debt comes from leasing, with 32% of millennials choosing to lease in 2016, up from 21% in 2011, according to a report from Edmunds. Households making $50,000 or less, millenials made up 21% of lessees.
If millennials pay their student loans over their auto loans, lower-credit-score applicants could have a hard time financing vehicle purchases. If that happens, automakers could be in trouble.
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