Car ownership is now a fierce trade-off with millions of Americans. Drivers are using emergency cash, postponing healthcare, and doing two jobs to keep their cars running as cars and interest rates become increasingly difficult.
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Unfortunately, many customers discover that debt nightmares come with dream cars. This article highlights the length of time people go to get their cars and how to avoid decisions that could ruin your finances.
Many consumers receive expensive loans to buy the vehicle. According to Experian, the average car loan was $40,927 for new vehicles in late 2024, with an average monthly payment of $737. This is a concern, as if a consumer is in debt more than his car is worth it can lead to long-term financial problems.
Affordable prices are the answer to this question as far as consumers are concerned. Tom Holgate, Way.com’s Auto Finance and Insurance EVP, said the biggest rule when applying for a car loan is affordability.
“If we lose some or all of our income, consumers should wonder if they can still make payments,” Holgate said.
Before signing an expensive loan, check your budget and look for something cheaper. Additionally, you should investigate creating more important down payments to reduce your loan amount and monthly payments.
Many consumers use the car payment extension to make payments more manageable. According to Experian, the average car loan lasts more than 72 months. It’s been 6 years. A long term on a loan usually means lower monthly payments, but it will result in greater full interest over the life of the loan.
If you need to extend the loan term to make monthly payments, the vehicle is too expensive for you. Consider looking for a cheaper vehicle or waiting for your purchase until you save a bigger down payment.
People are cutting back on things like groceries, healthcare, housing, and more to pay for cars. Sometimes this sacrifice can have a significant impact on overall quality of life and long-term financial health. Cheap food and postponed health checks are just a few of the choices some consumers make to cut costs for paying for their car.
If you need a personal vehicle, consider buying an affordable model or one of the new models in place of the new model. Before deciding how much you will spend on your vehicle, create a detailed budget that includes all your income and the costs you will need.
