With $1,000 Car Payments More Common, Here’s How to Cut Yours

You know inflation is bad when your monthly car payment hits a thousand bucks.

For an increasing number of drivers, that’s the reality. A record number of Americans are paying at least $1,000 a month for their vehicles, according to new findings from the auto inventory site Edmunds.

Nearly 16% of car buyers who financed a new vehicle in the fourth quarter of 2022 have monthly payments reaching four figures. That share of car buyers more than doubled in two years.

Even used car buyers aren’t totally safe. More than 5% of buyers who financed a used vehicle in late 2022 are paying at least $1,000 a month, according to Edmunds. That number more than tripled in two years.

Analysts fear that some of these high-dollar borrowers are getting in over their heads. They say people who buy cars today are at risk of going underwater on their car loans down the road as used car values ​​decline.

So we’re here to discuss two things:

  1. How to lower your car payment, and
  2. How to trade in a car that has negative equity.

We’ve got four tips for each.

4 Ways to Lower Your Car Payment

It looks like this is the future for more and more of us, since cars and car loans are more expensive than ever. The average sticker price of a new automobile has shot up to nearly $46,000.

Interest rates on car loans have risen to an average of 6.5% on new vehicles and 10% on used vehicles, compared with 4% and 7.4% two years ago, according to Edmunds.

Here are some ways to get a lower car payment:

1. Save Up for a Larger Down Payment

Just like with a mortgage, the more money you put down at the beginning, the lower your payments will be over the life of your auto loan.

For example, if you put a $5,000 down payment on a $25,000 car with 7% sales tax and a 4.5% APR, with a five-year loan, you would end up with a monthly car payment of a little over $400.

With no down payment and those same terms, you’d have a monthly payment of nearly $500.

2. Get Preapproved for a Loan

Get a…

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