How to Help Car Buyers Break the Cycle of Debt

Javelin’s case study compares two starkly different car buyers—one who builds car payments into their monthly budget for life, the other who breaks the cycle of debt by keeping cars longer and saving payments that otherwise would have gone to car loans. The contrasting financial fates of these hypothetical borrowers underscore the challenge for banks and credit unions that must balance the desire for near-term loan revenue without jeopardizing their ability to win the long game as a trustworthy financial advisor. This latter goal underscores the value of “fiduciary first” features in digital banking that enable customers to discern between “good debt” and “bad debt,” avoid a lifetime cycle of car debt, and develop healthy financial habits that turn car payments into savings or investments. The question facing digital banking strategists: What kind of car-buying advice do you want to provide?