According to the most recent data as reported by the Associated Press, the average car loan rose 4.5% in the past 12 months to an average of $14,435. The average balance has increased primarily through incentives offering better repayment terms and looser underwriting criteria, which has increased the sales of new cars.
Consumers should pay attention to their total loan balance as car values depreciate over time. While incentives that result in carrying a higher loan balance might make payments easier, you will likely be left with a higher balance should you decide to sell or trade earlier than anticipated. Zero percent financing with little money down remains an attractive option for many car buyers. But don’t forget to check conventional loan rates and compare savings from taking rebates or other incentives in lieu of financing incentives over the life of your car loan.
Today consumers purchase cars with the primary thought of “what’s my payment going to be?” Make sure you are also asking the question, “How much debt is this going to put me in”.