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A new vehicle will cost you $6,500 more than it did five years ago.
The annual percentage rate on car loans has risen from 4.4 percent to 5.7 percent since 2013, says a study from car-shopping website Edmunds.
On top of high auto loan interest rates, the average amount financed today is $31,020, up from $26,533 in 2013.
“The rise in interest rates impacts car shoppers across all credit tiers,” says an Edmunds editor Matt Jones. “Consumers will need to adjust their expectations on what they can now afford because they may not qualify for the same interest loan rates they did five years ago.”
Adjust their expectations how?
Car buying possibilities
Leasing or buying used are still options. Some disagree with leasing, though.
A new car isn’t for everyone. Some buyers don’t have good credit, and others don’t want a loan, period.
In fact, some financial experts disagree with buying a new car. It’s an investment that will only lose value over time. The amount a buyer needs to pay in interest adds up — and its not a cost of the car — just costs towards the loan.
Debt.com has previously reported tips to car buying, and the first one was, “buy used.” Of course, all those recommendations are for shoppers who would buy a used car with cash. Edmunds recommends to those with poor credit to finance a used car.
