When it comes to buying a car, there is now statistical evidence that most buyers are doing a lot to lower monthly payments. One option they’re taking advantage of is longer term loans.
“Last quarter, more people signed up for 72-month loans than they did for 60 month loans,” said Matt Jones, a car-buying advisor at Edmunds.
Jones says what buyers aren’t doing is being realistic about the actual costs of car ownership.
“They’re forgetting the other costs that come with car ownership like gasoline or insurance or maintenance,” Jones said.
All of which he says can double, or even triple the true costs. That can lead to buyers easily exceeding Edmunds’ recommendation of spending no more than 15 percent of monthly take-home pay to own and operate a car.
“And we actually like to advise people to spend that 15 percent to try to cover the whole of your car purchase, not just their payment,” Jones said.
Payments that Jones says are already averaging over 500 dollars a month for a new car. Those are costs that don’t include gas, insurance and maintenance.