Average Car Payment – Finding the Best Deals While Buying
One of the keys to finding the best deals when you want to buy a car is to draw up a budget that you truly understand. You need to be aware of what you are able to afford and the level of payment which you are willing to make to get the car that you want. This is the reason that it is important to understand what the average car payment in the US is.
Average Car Payment in the United States
So, what’s an average car payment? What is the average car payment per month? What is the average car payment? How much is an average car payment?
These are some of the questions that most residents in the United States tend to ask with regards to an average car payment. Experian, which is a widely renowned credit bureau, has explained that the average car payment 2017 figures were $502 every month in the case of new cars. Average car payment per month used car figures were put at $365 every month. Analysts at the credit bureau have gone on to note that estimated numbers on the average car payment have continued to rise the last 10 years.
One of the reasons that average car payment in the US continues to rise? It’s basically related to the increase in car prices over the years. The data released by www.Experian.com points to the fact that new car loans had an average amount of $30329 towards the end of 2017. If you go far back to 2008, new vehicles were financed by customers for $24060 on the average. See https://www.roadandtrack.com/car-culture/buying-maintenance/a27016809/new-car-msrp-increase-2019/.
The vehicles that we see today happen to be a lot more sophisticated and equipped with even better technology. This is an active contributor to The rising vehicle prices. Then again consumers are beginning to have different preferences. They no longer want to go with sedans. But, have begun to shift their tastes to expensive vehicles like SUVs and trucks.
Monthly payments made on auto loans are also affected or influenced by car loan duration. If you go for a loan term that is relatively shorter, you will need to pay off the loan at a quicker rate which means that the level of interest rates that will be charged will definitely be lower. However, going for a shorter loan term means that you will have to make larger monthly payments. This is the trade-off that exists. The same applies to go for longer terms when you apply for auto loans.
Average Monthly Car Payment
To compute your car payment every month, use our online car loan calculator, simply divide the amount of the loan by the duration of the loan and remember to factor interest in.
Going for a car loan which comes with a longer repayment term? It means that the number of repayments every month will be lower. But this implies that you will have to pay a larger interest rate. All of this translates into huge overall costs in the long run. This means that car title loans which come with longer payment terms are usually more expensive. Also, your future flexibility will be compromised.
Long-term Repayment Disadvantages
There’s another huge disadvantage that comes with long-term repayment loans. There is a risk that you will end up paying more when compared to what your car is actually worth long term. This mostly happens during the initial years. And, you will find it a challenge if you wish to trade in your car. Selling your vehicle will also be difficult. The worst case scenario would be if you get your car wrecked or stolen.
Experian also revealed the average car payment term was put at 69 months. This is with respect to new cars in 2017. It was slightly lesser for used cars which had average car payment loan terms of 63.95 months the same year. Today, consumers continue to opt for auto loans that come with longer repayment terms to ensure that they can meet up with the monthly payments even if they have to go with a model that is more expensive.
This is actually a mentality that you have to beware because it is very dangerous. Subjecting yourself to loans that come with longer repayment terms means that you will end up paying higher average car loan payments.
Work with this Monthly Car Payment Plan
You can actually adopt an approach which is more comprehensive and better structured when it comes to purchasing a car. You will have to come up with a budget. Of which, it takes into consideration the entire cost paid as well as what you’re expected to pay monthly. Going with a monthly payment plan which is easily affordable by you is ideal.
A budgeting strategy which is very highly recommended by authorities in the industry of car purchases that can help you so that you do not end up with high average car loan payments in the long run. It is highly recommended that you never make the mistake of channeling above 20% of what you earn every month to your car related budget.
Your car related budget would factor in other expenses apart from your car loan monthly payments. This includes car insurance as well as fuel and maintenance. If you take these expenses into consideration when trying to analyze your vehicle ownership options, it will provide you with a more comprehensive perspective on how much is really considered affordable in relation to your budget.
Keep in mind that this strategy from the experts should not be misinterpreted. People might try to see it as the excuse by needing to opt for a car loan that comes with longer repayment terms in order to keep the expenditures below 20% of all their earnings every month. This tip serves to provide you with a clearer picture with regards to setting realistic price ranges that are lined with your budget.
Drawing up a Budget
A key to finding your price range when you want to buy a car is drawing up a monthly budget that includes:
- Income after taxes
- Fixed expenses (bills, payments, food, etc.)
- Discretionary expenses (entertainment, memberships, vacation, etc.)
Subtract your expenses from your monthly income to calculate how much money you have leftover. Make adjustments as needed. You need to be aware of what you are able to afford and the level of payment which you are able to commit to.
Apart from taking into consideration only cars that are realistically affordable by you? Another idea that can help too lower your average car payments per month is to give a higher down payment. This is a very effective way of ensuring that your loan amount is significantly reduced. That way, your average car payment cost per month will be lesser.
Find the Right Auto Loan
Are you having credit issues and is it proving to be a challenge for you? Are you experiencing difficulties financing a vehicle due to your bad credit? We know how hard it is to find a solution.
Car Loans of America is here to help you to ensure that you find a lender regardless of your credit situation. Whether you need an understanding of the auto loan process or buy here pay here dealers, we’re here to help! Simply fill out our auto loan request form now.