Curbside Newsstand: “Debt Saddled Younger Buyers Lean on Parents”

Gregory DeLozier, right, with kids Christopher and Rebecca. He says in the last six months, he has paid over $15,000 in car expenses for his kids and their spouses.


This article in is a timely follow-up to my first CC from 2009, which I reposted this morning. It’s about parents extending financial help to their adult offspring of the automotive kind, but often at the expense of their own financial security. The premise is that kids saddled with student loan debts or just stuck in fairly low wage jobs can’t afford cars, and their upkeep. Well, parents have always helped their kids to one degree or another, so it’s really about degrees. As in the retired parents (not these) who bought their son (who lives with them) an Infiniti because he couldn’t afford his Corvette anymore after he got laid off.  And they feel financially trapped. Really?

There’s no question that getting started in life financially is much more more difficult for most young adults than it once was. I think about how I decided to move to San Diego on a whim in 1976, got a job driving a cab, and made enough to rent a cute little house on the hills with a great view of North San Diego Bay and the airport (for plane spotting). Good luck doing that nowadays.

Student debt, which totaled $1.46 trillion at the end of 2018,  is a very significant factor. State colleges and universities were once cheap, as were rents, healthcare and other things, and lots of students paid their way through school with part-time and summer jobs. That’s pretty much old history.

There’s no hard statistics about just how many parents are taking on debt to buy cars for their kids, but automotive debt in the 60 and older category has clearly increased. They now hold 21% of automotive debt vs. 12% in 2010.  Auto loans now constitute 40% of their debt load. And total debt load for older, as well as all Americans, continues to rise.

As to the dad in the featured picture at the top:

Even with four of the five children out of the house, DeLozier, 59, is still doing business as the “dealership of dad.” The software engineer and adjunct professor at Kent State University still shoulders four of his children’s vehicle expenses. In the last six months, he estimates, he has paid more than $15,000 in vehicle expenses for the children and their spouses.

“We’re like the circus net below everything that falls. That’s how parenthood is in America right now,” DeLozier said. “Your kids are on a high wire, they fall down, you pick them up and put them back up again. We paid for lots of repairs.”

Though he considers his children financially responsible, DeLozier said they have made some costly mistakes with their vehicles.

A few years after he bought his daughter-in-law a used Toyota Camry, she called him from the road.

“We call that DadStar ’cause they would call me and say, ‘Dad, I’m on the freeway, and something’s making a funny noise,’ ” DeLozier said. “She’s a young professional, a biostatistician, but she’s no car mechanic.”

His daughter-in-law had never gotten an oil change, he said, and the Camry’s engine had thrown a rod.

He knew she and her husband, his 28-year-old son, didn’t have the money to replace it. A few years before, he had co-signed on a Kia Soul with his son after he had hit a deer, DeLozier said. Before the accident, his son was overpaying for his vehicle, a used Nissan Murano.

“He paid like 50 percent more than what the Murano was worth, and at a ridiculously high interest rate. It was like $28,000 at 18 or 19 percent interest,” he said. “The only way he could get reasonable rates was to have me co-sign. This is about access to credit for him.”

DeLozier had an idea for his daughter-in-law. He passed down his vehicle, a Honda Fit, to his 19-year-old daughter and replaced it through CarMax. Her car, another Camry, went to his daughter-in-law.

“She’s got a car now because I was able to afford a new car,” he said. “That trickle-down effect gave two other people better rides.”

And to the parents who bought their son an Infiniti:

In New Jersey, Robertazzi and his wife are retired but feel trapped by their son’s financial situation. He couldn’t remember the last time they took a vacation.

“Here, what I thought was going to be a phenomenal retirement and a phenomenal future wound up just being the opposite,” he said. “Every little bit helps now, and every little bit that’s going towards everything else — it hurts.”

Not surprisingly, The Consumer Financial Protection Bureau says that parents who provide financial support to adult children have lower financial well-being scores than those who don’t. Financial advisers recommend that parents not place their adult children’s’ needs ahead of their own financial security.

From a article:

“Nearly half of families have no retirement account savings at all,” the Economic Policy Institute (EPI) reported, even in savings vehicles such as IRAs and 401(k)s. The median for U.S. families is just $5,000, and the median for families with some savings is $60,000.

Even older workers who can see retirement on the horizon aren’t prepared for it. The median savings for families whose wage earners are between 50 and 55 years old is only $8,000. For those who are between 56 and 61, it’s $17,000, reports the Economic Policy Institute.

That’s not good at all.


This chart clearly shows that older Americans are making up a larger share of used vehicle registrations. What’s not known is how many of those are actually for their children.

Another issue is that the supply of relatively affordable and dependable used cars is actually shrinking, as the market shuns sedans and increasingly embraces SUVs and trucks. The number of new cars sold for less than $20,000 dropped nearly 20% last year, while those costing over $40,000 rose by 7.4%. No wonder a recent survey showed that the number of Generation Z that say that owning or leasing a vehicle was too expensive is much higher than older respondents and even five years ago. Yet in many areas of the country, where suburbs and exurbs are often far from jobs, Ubers are even more expensive than a car because of the long distances involved, and mass transit is all-too often inadequate.

It’s a painful reflection of the fact that that the economy, which actually has consistently grown less fast than predicted every year except one since 2010, is showing signs of “secular stagnation” and has not benefited a large swath of the population.

I feel lucky to be able to have paid my older son’s college costs. He and his GF both graduated debt-free, and that as well as their stable relationship and good jobs allowed them to buy a nice house in Portland ten years ago during the recession. Meanwhile, a very substantial number of their friends are still renting and feeling financial stress of one kind or another.

The growth in younger adults living in cities in small apartments and without cars is one clear reflection. These choices of course ripple through the economy. Home building is still far below its last peak in 2006. Car sales have been playing catch-up, but are expected to droop starting this year. We looked at those factors here the other day. This discussion is of course veering away from strictly cars, but then cars are just a reflection of our current living arrangements and economic factors.


(update: this post is now closed to further comments. time to get back to other things)