Remember just a few years ago when a car loan was $300 a month?
Now, unless you put down a huge down payment, those days are gone forever.
The average new car, as of this fall, now costs $41,000, according to Edmunds.com (and many cars are selling for above sticker).
The average loan rate is now 5.7 percent, up from 3 percent a year ago.
Put the two together, andEdmunds saysthe average car payment just hit $700 a month in September.
But that's chump change for some shoppers, because the report says one in 10 buyers are now paying $1,000 a month.
Edmunds says buyers of loaded full-size pickup trucks and luxury SUVs are signing up for monthly payments as big as mom and dad's mortgage
And so far the slumping economy is not deterring buyers.
Longer loan as an alternative
But from the doesn't that stink file: longer and longer loans to avoid a giant monthly payment. Many loans are now 6 or 7 years, up from 5 years a few years ago.
But remember that your car will need a new $800 set of tires, and other expensive repairs, when you are still paying for it.
That stinks.
What can you do? Experts suggest you:
- Put down a larger down payment, if you can afford to.
- Otherwise, look at a cheaper car. You can still get a mid-size crossover in the $40,000 price range, which should keep your monthly payment down to $500 to $600.
- Buy a used vehicle: just realize that many 2-year old SUVs and pickups right now are as expensive as a brand new one.
So think hard before agreeing a to big monthly payment, or very long loan, so you don't waste your money.
__________________________
"Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
Follow John:
- Facebook:John Matarese Money
- Instagram: @johnmataresemoney
- Twitter: @JohnMatarese
For more consumer news and money saving advice, go to www.dontwasteyourmoney.com
