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Car loan payments at record high

American car buyers borrowing more; Average car loan payment at $482

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JACKSONVILLE, Fla. – Feel like your monthly car payment is weighing you down? Well you're not alone. A recent study shows Americans' average car loan payment is at a record high, at around $482.

On top of that, car buyers are borrowing more which could be leading to some of those heftier monthly payments.

I spoke with a local financial advisor who said job numbers are growing, so people are feeling more confident. But he said if you want to keep your car payment low and your future in good hands, to keep a few things in mind.

"You're having cars that were purchased seven or eight years ago starting to outrun their life so there's a need factor," said Hank Madden with Madden Advisor Services.

Need -- that's what should overpower want -- according to Madden. He said these days, the government has made borrowing much easier, which he said isn't to your advantage.

"This is creating an artificial debt bubble that will burst, unless something happens with the job market to further improve it, or further improve wages," said Madden.

According to Experian Automotive, Americans' average new-car loan payment hit a record $482 the fourth quarter. And 84 percent of new vehicle purchases were made with financing; around 55 percent for used vehicles.

Madden said both statistics, the higher monthly car payment and Americans' borrowing more to buy a car, can be helped by remembering three simple things:

  • Be realistic -- overcome the emotional aspect of buying a car and be realistic for what's best for you and your family.
  • Don't be afraid of used cars -- many have significantly lower prices, and still have low mileage.
  • Lastly -- if you're going to turn your car over every few years, consider leasing.
  • "Let somebody else take that hit. Why don't you lease it, and actually leasing will help you to step up to more expensive cars with more bells and whistles than otherwise you would possibly get," said Madden.

    His final piece of advice, especially if you're planning on buying a new car, is to add up all of your debt. He said if your debt is more than 45 percent of your income, you may need to reconsider and better weigh your options.