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.
In December 2018, the average loan for a new car was just above $32,000, compared with around $26,000 in 2010, according to Edmunds, which provides research on the car industry. The interest paid on an auto loan is now $5,555, up from $2,852.
The typical term for an auto loan has swelled to 68 months, up from 61 in 2010.
Financing a car is likely more expensive today than ever before, said Jeremy Acevedo, the manager of industry analysis at Edmunds. With the Federal Reserve‘s recent quarter-point interest rate increase, that trend could pick up, “potentially dampening sales in 2019 as shoppers hold off purchasing,” Acevedo said.
However, you may be able to reduce your car debt. Here are some strategies.