The Average New Car Payment Just Hit a Record High of $700 a Month

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Do you remember that just a few years ago, a car loan cost $300 a month?

Now, unless you put down a huge down payment, those days are gone forever.

The new average car, starting this fall, now costs $41,000, according to Edmunds.com (and many cars sell for the sticker above).

The average loan rate is now 5.7%, compared to 3% a year ago.

Put the two together, and Edmunds says the the average car payment just hit $700 a month in September.

But that’s a small fee for some buyers, as the report says 1 in 10 buyers are now paying $1,000 a month.

Edmunds says buyers of loaded full-size pickup trucks and luxury SUVs are signing up for monthly payments as big as mom and dad’s mortgage

And so far, the collapsing economy is not deterring buyers.

Longer loan as an alternative

But from the it doesn’t stink file: longer and longer loans to avoid a giant monthly payment. Many loans are now for 6 or 7 years, compared to 5 years a few years ago.

But remember, your car will need a new set of $800 tires and other expensive repairs, while you’re still paying for it.

It stinks.

What can you do? The experts offer you:

  • Put down a larger deposit, if you can afford it.
  • Otherwise, look at a less expensive car. You can still get a midsize crossover in the $40,000 price range, which should keep your monthly payment at $500 to $600.
  • Buy a used vehicle: Just realize that many 2-year-old SUVs and pickup trucks are currently as expensive as a brand new one.

So think carefully before accepting a large monthly payment, or a very long loan, so as not to waste your money.

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Elaine R. Knight