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How To Avoid An Unaffordable Car Payment


When friends from obscenely expensive cities like New York, San Francisco, and Washington, D.C. visit you in South Florida, they might admire the apparently simple life we lead here in the Sunshine State, but they are not seeing the whole picture.  In the urban centers and inner suburbs of the nation’s wealthiest metropolitan areas, you can commute to work on the train, subway, trolley, or bus, but the public transportation routes in South Florida are very limited.  It simply isn’t practical to live without a car in South Florida.  If you asked your friends and family to give you rides everywhere, you would eventually exhaust their patience, no matter how large your social circle, and paying for rideshare rides to and from work every day is a fast track to maxed out credit cards and negative bank account balances.  In America’s most walkable cities, cars are simply a status symbol, and you can easily trade in your car when times get tough.  Here in Florida, you need a car, and cars have gotten very expensive recently.  Just how expensive are they?  Expensive enough that you may need to strategize with a Miami debt lawyer about managing all your expenses and debts before you can afford a car loan payment.

How Much Is Too Much to Pay for a Car Loan?

Interest rates are rising, and so are the prices of cars.  Most new cars retail for over $40,000 in 2022; the chosen vehicles of self-consciously frugal folks now sell at prices once reserved for the rides preferred by aspiring video vixens.  With the average interest rate for new cars at about five percent, compared to nine percent for used cars, this means that, even with car loans where the term of the loan exceeds five years, most people who buy a car this month will be committing to a car loan payment of more than $700 per month.  According to Nerd Wallet, a car is within your budget if the monthly car loan payment does not exceed ten percent of your monthly income.  This is a near impossibility except for very wealthy people and for couples where both spouses are employed full-time and both contribute their income to the car payment.

Putting Together as Much Money as You Can for a Down Payment

The easiest way to lower your car payment is to reduce the amount you borrow.  To do this, you should put down as much money toward the purchase price as possible, even though car dealerships will happily sell you a car with no money down, and lenders are happy to see you finance the entire amount.  If you are trading in an old car to buy a new one, you can use the trade-in amount as a down payment.  Other influxes of cash, such as cash gifts at the holidays or tax refunds, can also beef up your down payment and reduce your loan amount.

When Car Loans Are Out of Reach

A South Florida debt lawyer can help you if your debt problems are so severe that qualifying for a car loan seems like a far-fetched fantasy.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.



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