Jul 12, 2024
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“It’s always an investment!”
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That’s how Daniel Rivera justified buying two cars using high-interest auto loans totaling $30,638.
The 22-year-old auto technician from Lubbock, Texas detailed his dastardly debts on Caleb Hammer’s YouTube series “Financial Audit” in July.
At the time of recording, he had a $19,042 loan for a 2016 Scion (now Toyota) iM, with an interest rate of 13.06% over a 72-month term. He took out this loan for his mom, who was trying to get a mortgage and didn’t want to take on the extra debt.
Unfortunately, he was roped into a two-for-one deal by the car dealers which meant he took out an additional $11,704 loan to buy himself a 2016 Ford Focus, with a shocking interest rate of 24.39% over a 72-month term.
Sadly, Rivera’s struggle is one that millions of Americans are facing, but with some careful money management there are ways to hit the road without racking up damaging debts that will take years to pay off.
Crunching the numbers
The average price of a new vehicle in February was $47,244, according to Cox Automotive, while the average used-vehicle price was $25,638. And even though prices are generally down compared to last year, that’s just your cost to get the wheels. You also you need to pay for your vehicle registration, car insurance, gas, repairs and more.
In addition to sticker price, cars come along with a host of other expenses that add up quickly.
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This is why it’s so essential to find the best car insurance option to save some room in your budget for car-related emergencies and debt.
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While you’re at it
If you’re struggling with paying off debt, it’s never a bad idea to cut down on as many of your monthly expenses as you can. A standard home insurance policy costs an average $1,411 per year, according to the most recent data from the National Association of Insurance Commissioners.
With OfficialHomeInsurance, you can compare the best home insurance rates in your area.
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All you need to do is answer some quick questions about yourself and they’ll instantly sort through leading insurance providers to find you the lowest rates possible.
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Put debt in your rearview
With new and used car prices locked in a painfully high gear, financing has become indispensable for a growing number of Americans.
Bloomberg recently reported that Americans are falling behind on their car payments at the highest rate in nearly three decades — with the percentage of subprime auto borrowers at least 60 days past due on their loans rising to 6.11% in September, beating a previous high of 5.95% in January.
That shows just how much of a bind young Rivera was in with his 13.06% and 24.39% loans, which Hammer described as being “absolute death” to his financial health.
If you’re spinning your wheels trying to pay off one or more car loans, one way you can get back on track is to opt for a personal loan with through a free service like Credible.
Credible lets you compare lenders to find the lowest interest rates with just a few clicks.
You can use then use that loan consolidate all of your debts, including your car loan, so you don’t have to juggle multiple creditors and interest rates every month.
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The Moneywise Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Moneywise Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.
