Don’t Waste Your Money: Longer Auto Loans
(WHTM) – With new and used car prices near record highs, buying a car can really be a case of sticker shock. Thus, dealers offer longer loans. But is it really a deal?
With average car prices up to $46,000 in 2022 and used cars up 30% last year, many buyers are finding themselves out of the market.
Get daily news, weather, breaking news and alerts straight to your inbox! Sign up for abc27 newsletters here.
The average monthly payment can reach $644 per month, according to bankrate.com. As a result, dealers are pushing longer and longer loans, which now range up to six to seven years, compared to 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 a seven- or eight-year loan can leave you underwater almost immediately, owing more money on your car than it’s worth.
And off the “it doesn’t stink” file, the biggest problem with long-term loans is that this car will need a new set of $800 tires, and probably other expensive repairs while you still pay each month. It stinks.
Nerdwallet says that instead of longer loans, you might want to consider buying a less luxurious and less expensive new car or try leasing, where you pay a much lower monthly rate.
So remember to keep paying for that new car when it’s an old car, so you don’t waste your money.