Right now, the average duration of a car loan is 5.5 years. That means you are likely paying interest -- and in some cases, high interest -- for more than 60 months. About a fourth of all new car loans today are considered subprime, meaning the borrower has a blemished credit score and is paying higher interest rates.
If you are in that situation, here are a few ways to get out of this unnecessary expense.
First, cut back on all other expenses so you can pull together about $1,500 cash.
Next, privately sell the car to get out from under the payments. Try to make some money or at a minimum break even. The goal is to fully pay off the loan.
Now that you have sold the newer car, paid off your loan, and have your cash in hand, begin shopping for a reliable used car that will get you where you need to go for the least cost. You are not buying a fashion statement; you are buying transportation.
With the booming demand for trucks and SUVs, you can get a good deal on a sedan, the typical 4-door car. Many of these older, larger cars are not in high demand. Find one for sale by owner with reasonable miles and evidence they took care of it.
Ask the Lord to lead you to right car. Get advice from someone in church who knows how to inspect it and help you make a good decision. It is not going to be a beautiful car. It is going to be your Freedom Mobile. Start now saving money each month to increase your cash to buy your next Freedom Mobile. Never go back to car loans again.
