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Percentage of Americans with Low-cost Auto Loans Surges while Burden of Car Loans Eases    
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With many Americans buying cars with employee-discount and other steep incentives in recent months, the percentage of those with car loans and leases costing less than $300 a month jumped sharply to 45%, up from 32% last year, according to the Cambridge Consumer Credit Index. The percentage of those with loans and leases costing between $300 and $500 dropped to 37% from 43%, while loans costing between $50 and $700 dropped to 10% from 17% in 2004.

As the size of car loan and lease payments dropped, the number of Americans feeling that car loans are a major burden preventing them from making major purchases dropped to 12% from 17% in 2004. Those feeling that car loans constitute a minor
burden rose from 39% a year ago to 43%.

"The results of the Cambridge Consumer Index wildcard show that many Americans were able to buy cars in recent months because of the extremely attractive pricing and financing terms made available by the domestic carmakers. This resulted in a sharp increase in the number of loans under $300 and a decrease in the level of burden that borrowers feel. This trend is unlikely to continue, though, because domestic carmakers have discontinued these incentive programs, and have seen their sales fall sharply as a result," says Jordan Goodman, spokesperson/financial analyst for the Cambridge
Consumer Credit Index.

These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse.

The overall Cambridge Consumer Credit Index rose by five points in November to 67. The Index rose in the question on expectations to take on debt both in the next month and futures intentions question but dropped in its intentions for last month. The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, fell by 5 percentage point from October to 16 points. A month ago, 83% of Americans planned to pay off debt, while a month later only 67% actually did so.

The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.

Chris Viale, President & C.E.O. of Cambridge Credit Counseling Corp. said, "This month’s Index continues to show that many low and moderate income households are relying on credit to get by. As difficult as it may be, it is vital that consumers in this situation find ways to reduce not only their reliance on credit, but to also pay down their debts. Some may need to find second jobs, others simply need to do a better job of sticking to a budget and controlling their spending, and some should consider credit counseling. If they continue to treat credit as a source of income, eventually their debts will become overwhelming and affect their financial lives for a very long time."

In conjunction with the Index, the Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 542 people who answered, this was the order of their responses:

1. My income has been reduced from a lower salary, less overtime or layoff (29.9%)
2. I am frustrated with high bank rates and fees (22.5%)
3. I want to improve my ability to achieve future financial goals like buying a house or saving for retirement (16%)
4. I got into too much debt by overspending (9.8%)
5. Other (7.6%)
6. Large medical expenses forced me to take on huge debts (6.8%)
7. My lack of financial education caused me to take on too much debt (4.8%)
8. Recently divorced or widowed (2.6%)
For more information on the survey, see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey
The Cambridge Consumer Credit Index number is a composite of these three questions:

1. In the past month, have you taken on more debt or paid off debt?
The Index reads 66 on this question, a drop of sixteen points from October.

In November, 33% of Americans say they have taken on more debt, with 23% taking on a little and 10% taking on a lot more debt. Conversely, 67% of Americans have paid off debt, with 53% paying off a little and 14% paying off a lot.

2. In the next month, do you anticipate taking on more debt or paying off debt?
The Index reads 56 on this question, up by 22 points from October

In November, 28% plan to take on more debt, with 8% planning to take on a lot and 19% planning to take on a little debt. Conversely, 72% plan to pay off debt, with 56% paying off a little and 17% paying off a lot. In October, 17% planned to take on debt and 83% planned to pay off debt.

3. In the next six months, do you expect to take on debt because you are thinking of making a major purchase such as a car, education, appliance, medical procedure, furniture or carpeting?
The Index reads 80 on this question, up by ten points from October.

In November, 40% of Americans plan to take on more debt to make such purchases, with 14% taking on a lot of debt and 26% taking on a little more debt. In contrast, 60% of Americans plan to pay off debt in the next six months, with 44% expecting to pay off a little and 17% expecting to pay off a lot. In October, 35% of Americans planned to take on more debt, while 65% planned to pay off debt.

"The results of the Cambridge Consumer Credit Index show consumers cut back on their use of credit sharply in the past month, but they expect to increase their use of debt in the coming months and over the next six months. The projected increase this year is far stronger than in previous years, showing that the gain is more than just a seasonal response to upcoming holiday spending." says Jordan Goodman, spokesperson/financial analyst for the index.

The Index survey is conducted by ICR (International Communications Research) of Media, Pennsylvania over five days in the week before the Index is released. Over 800 households are polled based on random-digit dialing, with all demographic and regional groups in America fairly represented. The Index has a margin of error of plus or minus three and a half percentage points.

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