And when they offer 12 year loans, people will happily sign up for those too because this is what people do.
When the statistics show that people who buy “average” houses and “average” cars can barely afford the basics, its because people will always spend as much as they can to buy the biggest , nicest house and the nicest car they can possibly buy. By definition this leaves them stretched and barely able to support themselves. This is what makes the “average” house and the “average” car so expensive.
Its how the human brain works with the inputs that we have in our society. The quest for status, the desire for feeling like part of the group, the reaching for something to make us happy, all leads to the consumerist mindset when we are bombarded with advertising and cultural norms that expect us to spend what we make (and then whatever we can borrow, because if someone will lend it, we must be able to afford it). We rationalize by comparing to other people, which is so much worse now due to the “highlight reel” presentations that we get from social media that make everyones lives look so great.
Now, we make fun of cars all the time, but how much does the “average” wedding cost now in the US? And the diamond that guys are told should cost, what, 3 months (!) salary? Logically this is so much worse than even buying an expensive car! This at the exact time in most peoples lives where saving money should be a priority and would have the most potential compounding power.