Young people aren’t paying their car loans. We can help.

Summary

Podcast Summary: The Indicator from Planet Money

Episode: "Young people aren’t paying their car loans. We can help."

Date: July 13, 2026

Host: Darian Woods
Special Guest: Sheila Bair (Former Chair, FDIC)
Format: Call-in-style consults on car buying for young adults

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Episode Overview

This episode tackles the growing issue of young people falling behind on their car loans, a trend not seen since the global financial crisis. Darian Woods invites Sheila Bair—former FDIC Chair and author focused on financial literacy for young adults—to answer real-life car buying questions from young listeners. Using a tongue-in-cheek call-in show format (inspired by NPR’s "Car Talk"), Bair dispenses practical, sometimes blunt advice to help young adults make smarter (and safer) financial decisions when it comes to buying a car.

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Key Discussion Points & Insights

1. The Real Costs and Risks of Car Ownership

• Debt Delinquency Stats:
  • Darian highlights a concerning trend: “About 1 in 20 car loans made to young people is in serious delinquency right now.” (00:45)
  • This rate is only exceeded in recent memory by the period during the global financial crisis.
• Sheila Bair’s Mission:
  • “There's nothing that will make a house more miserable than debt problems.” — Sheila Bair (00:24)
  • Her motivation for her new book: equipping young people with better financial knowledge and habits.

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2. Caller #1: Alex in Costa Mesa, CA — Can Biking Beat Buying?

• Caller’s Situation:

  • Alex, 21, has relied on biking but worries about needing a car after college (03:03)
  • Concerned about the financial burden of car ownership disrupting his affordable lifestyle.

• Sheila’s Advice:

  • “It's really expensive to have a car, especially if you need to borrow…$600 to $700 a month just for the car payment.” (03:26)
  • Added costs: insurance, taxes, gas, maintenance, parking.
  • Young men pay more for insurance.
  • “It's so much better environmentally if you just keep doing what you're doing.” (03:46)
  • Suggests waiting until his job and commute needs are clear before making a purchase.

• Memorable Moment:

  • Alex admits: “All my other friends have cars, so it’s kind of weird being the one guy without one…But it hasn’t made a lot of economic sense for me to take the next step.” (04:24)
  • Sheila applauds Alex’s skepticism and prudent decision-making.

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3. Caller #2: Kevin in Houston, TX — New vs. Used, Family Expectations

• Caller’s Situation:

  • Kevin, 23, tax associate, shares a car with his family but contemplates buying his own for convenience (05:11)
  • Considers a new midsize SUV ($30-60K), can put $20K down, would borrow the rest from family.

• Sheila’s Math Lesson:

  • Explains the true cost of a new car loan:
    • “$1,000 a month all in for all the different expenses you're going to suffer.” (06:32)
  • Strongly recommends used over new, noting new cars depreciate quickly.

• Family Pressure:

  • Kevin’s parents view used cars as a status issue: “The used car thing is kind of a hard no because I still live with my parents.” (06:54)

• Sheila’s Counterargument:

  • “You would be able to pay cash...without a loan, which would be a huge savings.” (07:14-07:29)
  • Illustrates the opportunity cost:
    • If Kevin invested the $34,000 extra spent on a new car instead, “you would have...$738,633” at retirement. (08:31)
    • “A lot of money.” — Sheila Bair (08:34)
  • “The used car will hold value much better than a new car will.” (08:36)

• Memorable Moments:

  • Kevin plans to have a tougher, data-driven conversation with his parents: “Maybe with this new information I'd have more to back me up...” (08:59)
  • Darian supports with humor: “How does that sound, Kevin? Does it sound like a daunting conversation to have?” (09:12)
  • Kevin: “I want to save money, but I think if I push for it, since it's my own money anyway, I could probably end up with a used car.” (09:17)

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Notable Quotes and Moments (with Timestamps)

• On the misery of debt:

  • Sheila Bair: "There's nothing that will make a house more miserable than debt problems." (00:24)

• Car costs reality check:

  • Sheila Bair: “It's really, really expensive to own a car.” (03:26)

• Environmental angle:

  • Sheila Bair: “It's so much better environmentally if you just keep doing what you're doing right.” (03:46)

• On the true cost of new cars:

  • Sheila Bair: "You're looking at easily $1,000 a month all in for all the different expenses..." (06:32)

• The compounding power of saving vs. spending:

  • Sheila Bair: "If you took that $34,000 and put it in a well invested retirement account ... you would have... $738,633." (08:31)

• Parental influence and status:

  • Kevin Le: “My parents don't want me to get a used car... it's kind of like a status thing for them.” (06:54)
  • Sheila Bair: "The used car will hold value much better than a new car will." (08:36)

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Practical Takeaways

• Wait until needs are clear before buying a car after college—don’t rush due to peer pressure.
• Carefully tally all the ongoing costs of ownership, not just the monthly payment.
• Used cars can offer massive long-term savings, especially if buying in cash.
• Don’t underestimate the power of compounding—what you don’t spend can grow significantly for your future.
• Family expectations may affect financial decisions, but facts and math can be powerful tools in navigating those conversations.

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Highlighted Resource

• Sheila Bair’s book: How Not to Lose a Million Dollars: A Young Person’s Guide to Avoiding the Tricks and Traps of Our Financial System

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End summary. If you’re a young adult thinking about buying a car, consider the math, the environmental impact, and remember: “You would be able to pay cash for a [used car]...without a loan, which would be a huge savings for you.” (07:14)

Transcript

[Kevin Le]

Npr.

[Darian Woods]

This is the Indicator from Planet Money. I'm Darian Woods. Sheila Bair was the chair of the FDIC during the global financial crisis. The FDIC is the government institution that protects us when banks fail. And in that role she saw firsthand what happens when people got into too much debt.

[Sheila Bair]

I've just seen so many people make mistakes, so many people lack basic knowledge. And there's nothing that will make a house more miserable than debt problems.

[Darian Woods]

So Sheila Bair decided to write a book to teach us how to think about money and she focused specifically on young adults.

[Sheila Bair]

I want to make sure they get off on the right start early on.

[Darian Woods]

Many of them don't. About 1 in 20 car loans made to young people is in serious delinquency right now. And that's a rate only exceeded in recent memory when Sheila was at the FDIC during the global financial crisis. So in her book she has one chapter about how to think about buying a car. So we thought what better way to help young people than a personal consultation with Sheila? And what better way to do it than with a call in show like NPR's classic car talk.

[Sheila Bair]

Hello and welcome to Car Talk on National Public Radio with us. Click and clack, the Tabit Brothers.

[Darian Woods]

Yeah, Car Talk, but just for young people and just for buying cars. Don't go anywhere.

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[Darian Woods]

It's Car Buying Talk from the Indicator from Planet Money. We have Sheila Baer on the line, former chair of the FDIC. Give us a call at 888. Car buying talk. That number is fake. Hello, you're on Car Buying Talk of Sher Le Bear.

[Alex (Alexander Kolev)]

Hi, I'm Alex or Alexander Kolev. I'm 21 years old and I live in Costa Mesa, California.

[Darian Woods]

So what's your car buying conundrum?

[Alex (Alexander Kolev)]

Right now I've just been biking everywhere and so far that's worked out great. But as I finish up my senior year of college, I'm starting to realize that I might need to get a car to be able to drive around and like get a full time job. And I'm worried that that price is gonna kind of price me out of the current lifestyle I have.

[Sheila Bair]

So I, so I love your skepticism. You're right. It's really expensive to have a car, especially if you need to borrow to, you know, buy the car. You're probably looking at 6 and $700 a month just for the car payment. A lot of that depends obviously on how expensive in a car you buy. Then you've got the insurance, which is at least a couple hundred for a young man. I'm sorry, but young men get charged more. You've got taxes, you gasoline, you've got maintenance, you've got parking. It's really, really expensive to own a car. So it is something you need to think hard about. And it's also, you know, it's so much better environmentally if you just keep doing what you're doing right. Or find a mass transit option. I don't know if that's available in your urban area. And a lot of this is just the unknowns of you haven't settled yet on a job and don't know what your commuting situation is and all that. And I would certainly advise to get that settled first before you really start thinking about seriously buying a car.

[Alex (Alexander Kolev)]

Yeah, that does, that does make a lot of sense. That's kind of what my game plan has been so far. All my other friends have cars, so it's kind of weird being the one guy without one. But like, so far it just hasn't made a lot of economic sense for me to take the next step when it really like, like you said, it's better for the environment, it's better for me, and it works for me to bike around everywhere at the moment.

[Darian Woods]

Happy biking, Alex. We appreciate your call. Time for another caller. You're on Car Buying Talk with Sheila Baer.

[Kevin Le]

Hi, my name is Kevin Le. I'm 23 and I'm currently living in Houston, Texas.

[Darian Woods]

And what's your car buying concern?

[Kevin Le]

I think my biggest car buying concern is the cost and the lack of inventory.

[Sheila Bair]

Can you tell me what you do for a Living.

[Kevin Le]

I work at one of the big four accounting firms as a tax associate.

[Sheila Bair]

So you're probably good at math. So maybe we'll talk a little bit about math in this conversation. But let's just start with why do you feel that a car is necessary to further your career? Or is it more you just like a car for the convenience?

[Kevin Le]

It's pretty much for convenience at this point. So I've been sharing a car with my family.

[Sheila Bair]

Yeah. Yeah. Well, I think you should think hard about it because you know, cars are expensive. Let's just talk about budget, what kind of car you can afford, what are you thinking about, what are you thinking about buying and how are you going to finance it?

[Kevin Le]

I was thinking like a midsize SUV, something like a Toyota Highlander or RAV4. Anywhere between 30 to 60K.

[Sheila Bair]

Right.

[Kevin Le]

I have about $20,000 put on down payment and I'd probably have to lease or borrow the rest from like a family member.

[Sheila Bair]

Right. So that's interesting that you might have the financial wherewithal within your family to do the financing. So let me just run some numbers by you. If you had to go to conventional auto lender, let's just say, let's call it, you're going to, you have a $20,000 down payment. You want to buy a $50,000 car. So you're going to pay $30,000 the interest rate for a new car. We're talking about a new car, I assume, is that correct?

[Kevin Le]

New car.

[Sheila Bair]

So for a new car, let's just say you do a four year loan, 6% interest rate, 30, $30,000. You're looking at easily $1,000 a month all in for all the different expenses you're going to suffer. A lot of people are going with used cars now. That's in my book. Have you thought about maybe buying a used car that'd be less expensive than a new car?

[Kevin Le]

Personally, I have looked into used cars, but my parents don't want me to get a used car. I think it's kind of like a status thing for them. They don't, they don't like used cars and I don't understand it. So that's why I'm having to get a new car. The used car thing is kind of a hard no because I still live with my parents.

[Sheila Bair]

Yeah, well, you know, I'm a tenacious, never say die kind of person. So let me offer you some arguments. Maybe you could give to them. You've got $20,000 now for a down payment. I googled SUVs used SUVs for less than 20,000. And I saw some compact SUVs. One was a Suburban Subaru Forester and the other was a Hyundai Tucson, which we have actually been very, very happy with the car. And they were 68 years old and they were less than 20,000. So you are looking. You would be able to pay cash for a. Without a loan, which would be a huge savings for you. Let's say here again, you're going to borrow. You're going to borrow from your family. Hopefully favorable terms, we don't know. But let's say you pay them 6% interest. So $30,000 additional cost to buy a new car plus another 4,000 or so of interest cost. So you're looking at $34,000 additional that you'll be paying for this versus buying a used car. If you took that $34,000 and put it in a well invested retirement account in 40 years, by the time you start approaching retirement, you would have. Drumroll please. $738,633.

[Darian Woods]

$738,633.

[Sheila Bair]

A lot of money.

[Vanguard Announcer]

A lot of money.

[Sheila Bair]

One final pitch I would make is that boy, new cars depreciate really, really quickly. The used car will hold value much better than a new car will. So I would really encourage you to talk with them about getting a good used car for 20,000. You know, they want to give you 30,000 now put it in your retirement account. You're going to be saving a lot of money by buying a good used car.

[Kevin Le]

I'll definitely try. That's the conversation. I was real short when I first had it. But maybe with this new information I'd have more to back me up.

[Sheila Bair]

Yeah, if you do taxes, you're good at math. And the math really adds up to buying a used car for sure. Yeah. Yeah.

[Darian Woods]

How does that sound, Kevin? Does it sound like a daunting conversation to have?

[Kevin Le]

I think it's going to be a challenging conversation for them. It's prestige. And I want to save money, but I think if I push for it, since it's my own money anyway, I could probably end up with a used car.

[Sheila Bair]

Yeah.

[Darian Woods]

Well, thanks, Kevin.

[Sheila Bair]

Good luck, Kevin. I hope everything turns out the way you want it to.

[Kevin Le]

I hope it does too. Thank y' all so much. Hope you enjoy the rest of yalls day.

[Darian Woods]

Thanks again, Kevin. And thanks, Sheila Baer, for your financial wisdom. Yeah, if you want more of that wisdom, Sheila Baer's book is how not to Lose a Million Dollars. A Young person's guide to avoiding the tricks and traps of our financial system. While it's happened again, you've squandered another 10 minutes listening to the indicators Car buying talk. Our esteemed producer is angel, the rare car collector Carreras. Our engineer is Travis Protel Perot Hagan. Facts were checked by Sierra Truth from above Juarez. Kate Kinconan, the Barbarian is our editor, and you better believe it. This is npr, National Public Radio.

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