Drivers are holding on to their cars longer than ever. Here’s why that’s both good and bad – CNBC
However, along with those new features comes higher sticker prices.
Kelley Blue Book cites the average price of a vehicle as $34,342. While a compact SUV averages $28,395, a full size pickup runs $45,252 and a full size SUV is priced at $60,670 on average.
Lindland said that in order to pay for those new vehicles, more buyers are taking out longer car loans. Some stretch out over 6, 7 or 8 years, but Lindland suggested not signing for more than a five year loan term.
“I’d never recommend going more than 60 months even if you have zero percent financing,” she added.
That may be sound advice for some, with consumers increasingly buying cars on loan: Last year, Americans had accumulated just under $1.2 trillion in outstanding auto debt. According to Equifax and The Federal Reserve Bank of New York, that’s up nine percent from 2015.
Lindland says buyers should consider the overall cost of the vehicle, not just the monthly payment, given that a car is a depreciating asset. “What you’re going to find is you’re going to owe more on that vehicle than its worth for years to come,” she said.