Car Loans
The car market in the United States is well developed. The driver’s age is 16 and up to old age. A car purchase is a troublesome and very costly business. Experts urge either to save up or pay attention to bank proposals for car loans. About half of new cars today are bought with car loan, and its average size has almost reached half of the cost of a new car.
How to plan to get a car loan?
The first thing to think about is the reliability of your earnings, the availability of savings and financial security in general. All experts recommend having a safety bag equal to 6 months of your average monthly spending.
Therefore, first of all, it is worth considering the need to buy a car: can you afford a car right now, is your family in a safe financial situation.
It is also important to think about whether you are taking a car that you cannot afford.
Pay attention to the cost of car, ask your dealership how much it will cost to maintain this car. Many automakers have long understood that the main income is precisely from after-sales service, spare parts and accessories.
Car loan or personal loan
If you are still confident that buying a car is affordable for you, then it is important to consider the type of loan offer.
Banks offering car loans spend huge financial and labor resources in order to calculate the most favorable rates, offer an additional discount on the cost of a car, so car loans for most buyers will be more profitable and simpler car purchase option.
However, if, for example, you have a debit card in a certain bank, there is a deposit there, you have already taken out a loan and always paid on time, the bank can make you a better offer in the form of a consumer loan.
Theoretically, this makes it possible to save money, taking into account the fact that you do not have to pay for insurance, life insurance, etc., besides, the car immediately becomes yours, since it is not a subject of collateral in the bank.
If you do not have a special offer on consumer loan, you will hardly be able to save money. In standard cases, mortgage lending (where there is property that guarantees the payment of the debt to the bank) is always cheaper than consumer loans, and the difference cannot be bridged by refusing insurance.
A lot depends on the client’s solvency, or rather, on how the bank assesses it. If the answer is positive, then the rates on a car loan and on a simple loan are now about the same.
Car loan in the USA – statistics
The average used car loan payment was $ 371 per month. Despite rising interest rates, Americans are buying more new and used cars than ever. Experian’s fourth quarter auto loan analysis shows that the average new car loan is hit an all-time high of $ 31,099, while the average used car loan climbed to an all-time high of $ 19,589.
When you look at how much income you need to cover this payment, it is definitely above your average income. In the fourth quarter, the average monthly new car payment hit an all-time high of $ 515, while the average car loan used reached a record high $ 371 per month. The move away from payments and loans is expanding the trend for consumers to pay more and take longer to pay for the cars and trucks they buy.
According to Experian, on average, Americans are extending new car loans by 69 months. The report shows that the average vehicle lifespan is over 64 months. Consumers are stretching their loans because new car prices have risen more than 10% in the past 5 years. In 2017, the average price paid for a new car was a record $ 35,176. That price has risen from $ 33,532 in 2015 and $ 31,773 in 2013.
One of the reasons people spend more is because they buy more trucks and SUVs that sell for higher prices. Another factor, especially in the past year, is the rise in interest rates.
For buyers with an average credit rating, the rates are higher than a couple of years ago, and this would mean a higher monthly payment. In February, the average interest rate for new funded cars was 5.2%, up from 4.9% a year ago and 4. 4% five years ago.