Planning to buy a car? You could be driving for a long time before you’re out of debt.
As interest rates rise and vehicles become more expensive, that new-car smell increasingly comes with larger loans and lengthier terms.
Americans now owe nearly $1.3 trillion in auto debt. In January 2019, the average interest rare on a new car was 6.19 percent, compared with 4.9 percent a year ago, according to Edmunds, which provides research on the car industry. The average monthly payment has swelled to $551, from $524.
Meanwhile, the typical term for an auto loan is now 69 months, up from 61 in 2010.
“Vehicle prices and interest rates are so high right now that consumers are facing the very real possibility of spending thousands of dollars more on a new vehicle than they did last time they purchased a new car,” said Jessica Caldwell, the executive director of industry analysis at Edmunds.
However, you may be able to reduce your car debt. Here are some strategies.