At Cassels Garage, we pride ourselves on giving our customers honest, reliable estimates and high-quality auto services. We want what is best for you and your car, and our outstanding reputation reflects these values. Purchasing, maintaining, and repairing a vehicle are important tasks that sometimes require hard decisions. This week we’d like to focus on a subject that has been in the news lately – debt from car loans. We would like to educate our readers on the subject of auto loans and offer advice on the savviest way to go about the car buying process.
Auto Loans Can Lead to Negative Equity
The Wall Street Journal recently published several newspaper articles about mounting car debt and how more and more Americans are falling prey to the vicious cycle of auto loans. One article titled “Mounting Car Debt Traps More Drivers” states that a third of people who traded in their vehicles for new ones in 2019 had an average of $5,000 in negative equity, which means they owed $5,000 more than the car was worth. This number has risen dramatically over the years, and so has the number of people financing cars.
Car Financing is on the Rise
Another article by Frontier Group and the U.S. PIRG Education Fund says, “Currently, 85 percent of all new car purchases in the United States are financed, up from 75 percent in 2009. In addition, 53 percent of all used car purchases are financed, up from 46 percent in 2009.” This rise in auto financing, easy lending standards, and long, high-interest car loans have created a cycle of debt that is so easy to get caught in, and it’s just as easy to fall behind on car payments. Yet another article references new numbers from The Federal Reserve Bank of New York that indicate “a record 7 million Americans are at least three months behind on their car loan payments. That’s about a million more than there were in 2009, the end of the last recession.”
Buying Pre-Owned Offers Benefits
As we stated in a previous blog article, the owner of Cassels Garage, Howard Fulton, advises the best way to purchase a car is to opt for an affordable pre-owned vehicle and pay it off upfront, if possible. Of course, not everyone can afford to buy a car outright, pre-owned or not. If you do require financing, Fulton suggests putting down as much as possible upfront, securing a low-interest loan, and paying it off as quickly as possible. This way you’ll avoid paying mounting interest fees and the snowball effect of long-term auto loans.
Focus on What You Can Afford
We know how important it is to have reliable transportation, but we urge those considering buying a vehicle to do their research and choose a vehicle that they can afford. When you’ve found a car, truck or SUV you like, please bring it into reliable auto mechanics, like Cassels Garage, to get it checked out. We are honored to have provided top-notch automotive repairs and services to the people of Brevard County since 1966. Whether it’s a simple oil change or a more complex transmission repair, our expert mechanics are up for the job. Call us today to schedule an appointment or to find out more about the expansive auto services we offer, including fleet maintenance and car concierge services in the Melbourne, Florida area.
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