Apparently U.S. consumers would rather keep their cell phones than their automobiles. Consumers who are struggling financially are prioritizing payments on their latest iPhone instead of their automobiles.
Bloomberg has more below and the full story here.
U.S. consumers are more devoted to their mobile phones than their automobiles.
The sea change has taken place over the last few years as mobile devices become an integral tool not just for communication with loved ones or employers, but also everything from banking to dating to watching TV and listening to music. As cars grow relatively less important, borrowers struggling to pay back their loans on time are increasingly prioritizing payments on the latest iPhone instead of making sure they hold on to their pickup or coupe.
The shift is increasing the attractiveness of bonds generated from mobile-phone loans, a small but growing portion of the asset-backed securities market. While just $7.7 billion of bonds backed by phone purchases have been issued since 2016 –
– and all by Verizon Communications Inc. — the number may increase over coming years.
“Payment priority of cell phones is higher than personal and auto loans and similar to or slightly lower than that of mortgage,” Ram Ahluwalia, the chief executive officer of PeerIQ, a New York-based provider of data and analytics for the consumer lending sector, said in an interview. “Now with Lyft and Uber, you can access transportation via cell phone. The car no longer is a central asset. Technological change is driving shifts in consumer behavior.”
There isn’t much breakout data available for mobile-phone loans because it’s a newer segment. But the above chart based on data from credit reporting agency TransUnion shows how the broader categories have shifted over the last five years.