Equifax Canada released a statistic today saying that Canadians owe over $1.5 Trillion dollars on non-mortgage debt. (Credit cards, lines of credit, car loans etc) Yes, that was trillion with a T, not billion.  That is on average $20,891 for each of us, up 7.4 % from a year ago. They don’t say whether spending was up or if this is the interest accumulating on our current debt, but either way that is a scary number.  Each of us owe the equivalent of a new car and if there is a portion of the population with no debt that means that the rest of us have more than our share.  This is more than American residents carry at the moment. Their debt- to-income ratio is on average 1.40% down from 1.67%  during the recession a few years ago while we have increased to 1.63% currently. Debt-to-income ratio means that for every dollar we earn, we owe $1.63 to lenders.

Of the new credit being obtained a majority is for new cars. A few years ago a car loan was usually for a 4 year term. If you couldn’t pay it off in 4 years, you couldn’t afford the car. Simple!  Now the manufactures and lending agencies have stretched that to 5 and 6 years and on occasion to 8. If you trade it in before you pay it off, the remainder is being added to the new car loan and you will never catch up. This is good for everyone but the consumer. The automotive dealers sell more cars, the lenders make more money but the consumers are buying more car than they can afford to pay for. That shiny new car in the driveway is owned by the bank not by you.