As millennials overtake baby boomers as the largest generation, doomsayers argue that the American Dream has died. The idea that one could own a car, home, and have a regular Monday-Friday, 9-5 job seems as dated as the idea of a white picket fence. While young adults today certainly have a considerable number of unique financial challenges, headlines seem to indicate that the apocalypse is already upon us. Is all of this doom and gloom warranted? Is the American Dream dead?
Some statistics contradict this narrative. Emerging from the financial crisis of 2008, unemployment rates are actually lower today than they’ve been in nearly a decade. Analysts predict that they will continue to decline throughout 2017. Furthermore, the number of job opportunities has grown consistently since 2011. The economic outlook for America is very positive. Even if you accept that the aspirations of yesteryear have died, they are certainly in the process of being resuscitated.
Regardless, poor credit does not need to dictate future financial decisions. With planning, financing a car and a home is a real possibility. Millennials across the nation are finding ways to access lending and realize the dream. In fact, many millennials are leading successful lives and finding ways to make major life purchases they’d previously written-off as unattainable. Despite unprecedented student loan debt making bad credit a common challenge, many young adults across the nation are taking steps towards buying a car, owning a home, and being able to pay for their families to live comfortably — the hallmarks of the American Dream.
Rising Cost of Education
In the US, students and parents are instilled with the idea that a college education is a necessity to lead a fulfilling life. Of course, encouraging students to seek higher education is beneficial to the country; doing so is essential to building a talented and diverse workforce.
Throughout the last few decades, however, the cost of college has skyrocketed. In 1976, the cost of a college education was $2,350 (around $10,000 in modern USD). Today, that number has risen to $33,000. If that doesn’t seem insane to you, consider this: If car prices had risen as quickly as college tuition, the average car loan would require well over $80,000. Auto lenders realize, of course, this far from the reality. So why have college prices increased so drastically? Critics blame bloated administrative fees, increased enrollment rates, and decreased public funding.
The average millennial graduate can expect to pay just over $300 a month on student loan payments, assuming an interest rate of six percent on a 10-year repayment plan. For underemployed graduates, this constitutes anywhere from 10 to 25 percent of their monthly income. Millennials feel restricted by this financial burden, and may be intimidated by the prospect of taking on a new car loan or making mortgage payments.
The Debts that Bind
It is no wonder that millennials are afraid of additional debt. Student loans obviously have had a notable impact on auto sales. It is a simple fact that getting ahead in life and taking a deliberate approach to rebuilding your credit can be a struggle when you are under a mountain of debt. Poor credit can make it difficult to find a favorable way forward. Fear of additional debt has led young adults to delay major life decisions, or to even consider what lending options may be available in their situations. This is what has likely led to the proclamation that the American Dream has become unattainable.
Indeed, this narrative even has had automakers worried for several years. Despite constituting 30 percent of the population in 2010, millennial shoppers only purchased 17 percent of new cars that year. While there could be multiple factors that impacted this statistic, it’s reasonable to consider that a combination of existing millennial debt, the resulting poor credit, coupled with a lack of perceived available options for financing and credit repair contributed to the low numbers.
Fortunately, this trend does not persist today; more recent data paints a positive picture of millennial borrowing and car ownership. In 2016, millennials purchased 28 percent of all new vehicles. This spike illustrates that millennials are simply delaying car ownership, rather than shunning the notion altogether. This upward trend is partially due to the fact that consumers — even those with bad credit — are increasingly relying on car financing.
Financing the Dream
Financial burdens limit your ability to get a car. Being without a vehicle limits your job opportunities. This cycle has affected millennials for the past decade, but it doesn’t need to. Regardless of the struggles with bad credit affecting young adults today, there are options for those in need of a vehicle.
Loans can be a major source of discomfort, but they can be handled intelligently. Prior to securing the finances needed to purchase a car or a home, do a little research. While many institutions and dealerships offer financing, it is important to explore your options.
Your auto financing options are determined by three digits: your credit score. Your credit score will have a major influence in what kind of loans are available to you. Since millennials often struggle with debt, their score can suffer. While it would seem that delaying an auto purchase altogether is the only choice for some young adults, there are options for nearly any individual. Fortunately, bad credit car loans are available for people in need.
For millennials looking to avoid keeping debt for any longer than necessary, a simple interest loan is the best choice. Since the interest rate of a simple interest loan is determined by the remaining balance, those looking to quickly pay off their loan can lower interest costs by overpaying each month. Precomputed loans may be tempting, but the interest rate will not fluctuate as the remaining balance does.
People often interpret the American Dream as a promise. After realizing that it is not a guarantee, many citizens declare that the dream is dead. But it isn’t a hoax. For millennials who carefully manage their finances and take steps to rebuild their poor credit, the fundamentals to enjoy a fulfilling life are clearly attainable. Don’t be afraid to pursue the dream; you do not have to be held hostage to a poor credit score. Through careful planning, financial success is within reach. The American Dream is alive for those with the determination to pursue it.