Now Used Cars Are Unaffordable, Too

Seven-year car loans are nothing new. It is a seller’s market for new cars, and it has been since the days of the COVID lockdowns. The average sticker price for a new car in 2025 was $49,000, and most consumers paid the sticker price, because the demand for new cars exceeded the supply. Buying a new car has always been risky. New cars depreciate quickly; as your high school economics teacher told you, the difference between a new car and a gently used car is just a drive out of the dealership parking lot after you sign the paperwork, as well as thousands of dollars in resale value. Therefore, you can quickly end up with negative equity on a used car. This risk is even greater the longer the term of your car loan; with a seven-year loan, you make only a tiny dent in the principal balance each month. Buying a certified pre-owned car, which is what you and I would call a gently used car, makes more economic sense; the price is much lower than a new car, even though the mileage is still low. If you have been looking at prices in the hopes of buying a car, you have probably noticed that, these days, certified pre-owned cars are now prohibitively expensive, too. If you can buy a car at all, you are looking at a hefty car payment each month. For help managing car loan debt before it starts, contact a Boca Raton debt lawyer.

Eventually, Capitalism Comes for the Things You Thought You Could Afford

Why are used cars so expensive? It’s because everybody wants one. The few people who can afford to buy new cars buy them, but for most of us, that is out of the question. It isn’t just the sticker price of the car that makes it so expensive to finance a used car. Most people who buy used cars have driven their previous cars until they barely functioned, so the trade-in value was low, yielding only a small down payment for the purchase of the next car. Therefore, they are financing most of the purchase amount. If you are buying a used car, you probably have a lower credit score than the new car buying crowd, which means that the lender will charge you a higher interest rate for the car loan.

What to Do If a Gently Used Car Is Outside Your Budget

If you can’t afford to finance a used car, you can buy a clunker with a four-digit price tag at your own risk. You can also share a car with a friend or family member, either by borrowing the car whenever you need it and contributing to the payments for gas, or else by buying the car jointly with the other driver. If your current car still functions, the most cost-effective option is probably to continue driving it for as long as you can or until loans on used cars become more affordable.

Work With a Debt Lawyer About Car Loan Debt

A South Florida debt lawyer can help you address your finances if a used car is outside your budget.  Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.

Source:

investopedia.com/used-car-prices-are-climbing-you-might-not-love-this-money-saving-advice-11950766