Should you take out a car loan over 6 or 7 years?
(WCMH) – With new and used car prices near record highs, buying a car can really be a case of sticker shock.
With the average price of new cars up to $46,000 in 2022 and used cars up 30% over the past year, many buyers are finding themselves out of the market.
The average monthly payment can be as high as $644 per month, according to Bankrate.com. As a result, dealers are pushing longer and longer loans: six or seven years, compared to five years a few years ago.
They usually sell it as an 84 month loan, because that’s not as scary as saying seven 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.
Biggest problem with long-term loans: This car will need an $800 new set of tires, and probably other expensive repairs, while you’re still paying monthly.
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 think twice before you keep paying for that new car when it’s an old car, so you don’t waste your money.
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