Loan amounts and payments hit all time high!

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We all know prices of new cars are not going down so obviously loan amounts are going up, but the thing that hurts is how much. Most of us need a car to get back and forth to work. I’m not saying that we need a new car but sometimes there is no other option and some deals are to hard to pass up.

The average amount financed for a new vehicle is $28,381 and that was a record setter for the fourth quarter of 2014. This was an increase of $950 from the year earlier quarter and a rise of $582. The rise in transaction prices parallels that in amount financed. In December light vehicle transaction prices rose nearly 3 percent year-over-year to $34,367, making December the highest month on record for average transaction prices.

Experian’s data showed that the average new vehicle payment also hit a record in the fourth quarter, reaching $482, up from $471 in the year-earlier period. The average used-vehicle loan rose to $18,411 in the fourth quarter but this was not a record setter.

With these loans and payments hitting all time highs I have to wonder how most average people can afford a new car. Most baseline smaller cars are in the $20,000 range but once you start getting to your four wheel drive crossover/SUV territory prices start to sky rocket. Up here in New England it is almost needed to have an all wheel or 4 wheel drive car, especially this winter.

Know exactly when to sell your car

Knowing exactly when to sell your car is will save you money and hassle, assuming you pull the trigger at the right time. Selling your car too early might cost you money on a new car that you didn’t need to spend and selling it too late may cause you to put money into the car that you didn’t want to spend. There are a number of philosophies out there on exactly when to do this and a few are listed below.

When the Warranty is Up.

Car companies are offering more and more warranties, not just on brand new cars but also on used cars. Or at least offering warranties that usually will work on a car that has more than one owner. Some of these warranties are better than others, covering more of the car and lasting for a longer period of time or number of miles the car has driven. However, these car companies offer warranties like this for a reason, as they know after a certain number of miles or years, the car is much more likely to break down in specific areas and will cost them a ton of money in service. Meaning it will also cost the owner a ton of money in service. So consider selling your car when the warranty is up or, better yet, selling it a year before the warranty is up, so the new owner feels like they have a safety net when they purchase it.

When You Hear and Feel Some Differences.

If you’ve driven a car for an extended period of time, you’ll often recognize differences in the way it drives or sounds. On an older car, this can be signs of something that is about to go wrong, as parts inside the car may just about ready to give out and begin making a different sound. When you suspect this, you might want to take the car into a automotive center for a general inspection. If there are signs something might happen, you’ll probably want to get rid of the car before it does.

Run it into the Ground.

There are some very loyal car owners out there who never sell their cars until the cars just basically stop working. They will pay for the cost to fix their cars through a good trustworthy mechanic and hope that this is less than the cost of a new car payment in the long run. They never sell their car, or only sell it when it’s barely running, probably for scrap or parts. Sure they are driving around in a car that may or may not make it from point A to point B, but they have a lot of personal history in the car they drive. There’s something noble about that… even if they never know when the car might die on them.