Don’t Waste Your Money: Longer Car Loans

(WHTM) – With new and used car prices near record highs, buying a car can truly be a case of sticker shock. Therefore, traders offer longer loans. But is this really a deal?

With an average car price of up to $46,000 in 2022 and a used car price up 30% over the past year, many buyers are being squeezed out of the market.

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The average monthly payment is up to $644 per month, according to bankrate.com. As a result, dealers are pushing for longer and longer loans, now up to six to seven years, up from five years a few years ago.

They usually sell it as an 84 month loan because it’s not as scary as saying 7 years, but nerdwallet.com suggests you say no to 72 and 84 month loans. The site says that a seven or eight-year loan can leave you under water almost immediately, as you owe more money on your car than it’s worth.

And from the Doesn’t Stink File, the bigger problem with long loans: This car needs a new set of $800 tires and probably other expensive repairs if you’re still paying for it every month. That stinks.

Nerdwallet says that instead of taking out longer loans, you might want to consider buying a less luxurious, cheaper new car, or try leasing, where you pay a much lower monthly rate.

So think carefully about whether you’re still paying for that new car if it’s an old car so you don’t waste your money.

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