Buying a car can turn you upside down

Buying a Car Can Turn You Upside Down

The length of time of repayment for the average car loan has now reached six years. By spreading payments over such a long period of time, the buyer may turn out to be "upside down", and that can be a painful experience.

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It's expensive buying a car and it only gets more so as time goes on. Over time, the price of new cars has increased faster than the rate of inflation. This isn't entirely due to greed on the part of automakers; cars are also more complicated and useful than they used to be. Sure, they were cheaper in the 1960's, but they didn't include air conditioning, air bags and video systems. Convenience and safety comes at a price.

With the increase in price comes an increase in the length of time people are taking to pay off their cars. Few people pay cash; most people take out loans and pay over time. The average car loan, which used to be repaid over a period of three years, now averages about six years in duration. That's a long time to pay for a car, especially if you have no plans to own it for that long.

Taking six years to pay for a car has its advantages, as the payments are lower than they would be over a shorter loan term. Such a long loan does have a significant disadvantage, though - you can

 

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