High Interest Rates Make First Car Loans Unaffordable
Many young adults are facing significant financial strain when purchasing vehicles. High interest rates, limited credit history, low income, and unexpected expenses combine to create a difficult situation, often forcing them to consider selling their cars or accepting unfavorable loan terms. This impacts their ability to manage other financial obligations and achieve long-term stability.
SOURCES (60)
“So my husband and I have only one old junky car between us and he uses it to drive to and from work. I work from home, make very little and would like to get a job outside the home but transport is an issue.…”
“Is there no option to give the car back, get a personal bank loan for 10k to pay off rest of the car and send 5-7k on a decent used daily?”
“A little over a year ago I made a stupid decision and financed a 2023 Honda Civic for around $30,000 at 15%. I can’t afford the payments anymore (never really could in the first place) because I made a career change that didn’t work out. I still owe $24,200 but a dealership offered me $21,000 for it. I can pay the difference but I wouldn’t have any left to buy a beater. My wife has a reliable car that we could both use to get to work until I save enough for a beater. A friend of mine has a 2003”
“I will probably get grilled for this, but I currently have a paid off sedan, I just moved and I’m now in an area with snowy winters and mountains. My current car wouldn’t be able to commute through that for my 185 mile commute 3x a week. I’m looking at getting a new suv with all wheel drive. I have 0 debt, would bring home 4,100/month and get a car allowance. How bad would it be to get a new car with 6 years financed $550/month payment 1%apr if from my estimated budget I would still save about 2”
“Then keep it, keep saving for a car. You have $10k for repairs right now. If you can keep it for a few more years it’s possible you can just pay $20-30k for a new to you car when you need it. Best part is if your car dies on Tuesday you can go buy something in cash hopefully and be back on the road Wednesday.”
Buy an old Toyota Corolla or RAV 4 for cash, they last a long time
“Thank you. I didn’t know I could return it early but I’ll do that. I have a good credit score so I’m looking for ways to get out of this lease without hurting it. I’ll take your advice and I’m considering other options like having a company buyout my lease. W husband btw and w relationship yall were there to support each other and not get scammed 🫡”
“Well, it’s a hard lesson, but you definitely won’t make that mistake again. The last time I financed a car was back in 1999 for a Hyundai Elantra wagon. I made two mistakes—I needed a car and I fell in love with it. My husband and I were going through the financial paperwork, they were washing it, I was reading the owner’s manual … and then we got to the nitty gritty. Instead of the agreed rate and payments, they were presenting us with a rate jacked up to something like 15%. My husband was an i”
“You have plenty of liquidity and that will prevent you from being rushed into anything. If your car has a catastrophe and shits the bed your are more than able to rent a car while you are deciding what your next move is. Your financial preparation will help you not be in a desperate situation.”
“I’m 27m and just started a new job that requires driving around 2000 miles a month. I get reimbursed .76 cents a mile and my salary is 90k guaranteed for the first year (I’m in sales so it could be more). I have a 2008 Accord with 145k miles on it right now. I have 10k saved for either a new car or car repairs. I have a fully funded emergency fund and 12k saved for a house down payment. In total I have about 55k outside of retirement. Should I just keep driving my accord and fix it when needed,”
“It's not just the games anymore. When I was buying used vehicles they werelike 3-5k. Becuase it was $30k for a brand new truck, not 70k. Not a lot of people looking for a depreciated older car are able to get 10k cash tpgether for a private sale. It's a lot of headache just making sure the guy who comes to buy it can actually afford it.”
“When I got the car it seemed doable but things just keep getting more and more expensive and my insurance definitely want high like it is now. I think it is in my best interest to get something more affordable. I’m okay with downgrading the car as like 50k miles anyways as of rn. I just want to make sure it makes sense because if my loan is almost up I might as well get going”
“I know this sounds horrible and the straight forward answer is you don’t but I am looking to get a car as I will need one soon to get too and from work but am not in the best financial position currently. My credit is a work in progress as of right now and currently my score is 537 due to several poor financial decisions in my early 20s, currently 24. I was wondering what the best way to go about this is, what I will need in terms of a down payment, and lastly if a credit union or dealership wou”
“I'd say you should calculate the amount you can afford and pay for quickly as a goal to a set timeframe. Say 2k per month and pay it off in a year would be around 24k. Get a loan that is longer than that, so your monthly payments are lower in case you get laid off. But actually pay it off faster. A used vehicle between 15k-25k would be fine in your case then. This way you can afford to save to move out or invest and pay off the car at the same time.”
“Hello all needing some advice , I am 24 in the Army and need some help/advice I’m wanting to purchase a truck because of the roads where I am stationed aren’t that great for the car I currently have . My credit is pretty low 570-600 . I have $4,000 to get a truck but they are requiring a co signer . I was denied by navy federal for $25,000 . My current payoff for the vehicle I have now is $4,000. What should I do ? submitted by /u/ClassroomFriendly664 [link] [comments]”
“I would also say cars. I have an old Nissan, 256,000kms 1500cc. Fill it up maybe every 450-500kms. If I were to sell it I would get sweet bugger all for it. Someone I know bought a brand new Mazda CX-80 and they're only on their 2nd tank of fuel and it's done 4000kms. Only thing is it's a 2026 model so while it's cheap to run, expensive to buy.”
“I am trying to figure out the best way to make a down payment on a car. I recently sold my camper for $5000 that I was going to deposit in my checking account. I could prove that by the title. I also have about $9000 in cash I have saved up over the past 10 years or so. For that I don’t have any receipts or proof of where the money came from. It was $500 from a yard sale, $2000 from selling a mower, transactions like that where I didn’t keep any records of. Would a car dealership have to file fo”
“In May of 2024 I bought a 2019 BMW 530e out of desperation.. totaled my 2016 Honda Accord V6 Touring and there was nothing good on the market. Purchased the BMW for $44k, took on a loan of $15k amortized over 3 years with bi-weekly payments. It’s been good to me, no issues or anything. However, I found a 2017 Honda Accord V6 Touring with 160,XXX km for $17k. Immaculate condition, full service records with Honda and no claims other than broken glass. The BMW currently has 130,XXX km with my loan”
“I’m 26M. I have a sports car that I bought right out of college that has been paid off for over 3 years. I’m considering buying a new car to daily drive, but I don’t want it to impact my timelines for a house or marriage. I make $125k/yr and I have $120k saved outside of retirement accounts. My cumulative retirement savings is $100k. I max my 401K each year ($24.5k). I have NO debt. I save anywhere from $2.5-3k/mo after all bills not including retirement savings. My main upcoming goals are to bu”
“I am vacillating on the idea of selling my 14 IS250 sedan with 240k miles PAID OFF to upgrade to a reliable SUV (GX460 or RX350). We still owe about 10.9k on my wife’s SUV but I’ve paid off ~52% of it since the purchase 8 months ago… aggressively. Now, my car is small and I have two little kids that make it a challenge to run around, but it’s doable and we all fit despite the cramped legs. The IS250 has aftermarket wheels which are prone to being infrequent but frequent enough replacement. This”
“Hello I am 21 years old i make 2.2k cad$ monthly. I want to finance a 23k 2019 mercedes c class with 2k down. I know it’s not a good idea. But i really need a car i use my parents to get to work and I don’t have too much saved to dump into a car so only way looks like financing and I don’t want to take out a loan on a car which i will start hating the moment i hop in it. And I also be gambling and usually wasting and losing my money in order to get a car that was why i would gamble so i am think”
“Just my 2 cents. A new car one of the single worst investments someone can make. As soon as it leaves the lot, it becomes 'used' and loses 20%+ of it's value. Think of it this way, in the case of a 60k new truck, as soon as you sign those papers and take that truck home you lose $12,000+/- on that investment.”
“I am looking to buy a used truck with 182000 miles on it. I have a 690 credit score. And have about $2500 to put down. I am looking to finance through a credit union. The loan would be for ~$24000. I make $3500 a month and have no other bills. Would this be possible through a credit union? I do have a short history of overdrafts and my credit was pretty bad this time last year but I have managed to save a good chunk of cash and have repaired my credit. submitted by /u/noneyhuttt [lin”
“Hello! I have come into a lump sum of money, and wondering if it would make more sense to use the money to purchase a car, or pay down my debt. I currently don’t have a car, I work about 30 hours a week and go to school full time. I am about 7k in credit card debt. I know, it’s bad. My interest is 30%, even worse. Would it make more sense to put 5k towards my debt, or to use the money to outright purchase a beater from Facebook marketplace 😭 submitted by /u/Weak_Honey8738 [link] ”
“Credit union 1st, let's say they offer you 9.9% Then use that against dealership to get better rate”
“A $500 car payment is $6,000 per year. Every year for the loan period. Repair the car and start saving what you can for the next one.”
“about 2 years ago i traded in my 2019 kia rio (~$300/mo payment) for a brand new 2024 subaru crosstrek ($587/mo payment). what i was thinking at the time? i have absolutely no idea. i make enough to cover the payment and car insurance (which is around $120/mo) but aside from other financial obligations, that’s about all i can afford. there’s no room for saving or extra spending. my interest rate is already 3.9%, so refinancing isn’t really an option. i’ve been exploring trading in for an older m”
“I’m 18 and looking for a new car soon since my current is building up multiple issues. I used to be completely against financing a car because in my head it’s always better to buy it outright, but in my current financial situation I can’t. My budget is 15k right now and my credit score is 720. This is my first big purchase in general and I want to make sure I do it right and not make any dumb mistakes. Is there anything I should know and or definitely avoid? Thanks! submitted by /u/T”
“Buy a car with cold hard cash. Look if your making 100K per year and your car isnt dead yet, save your money for 4 months and buy something nice for 4-5k. Dont listen to people telling you that you need a brand new car. I got a 2011 lincoln town car 2 years ago, have not had a single issue I couldnt fix within an hour and havent had an issue which prevents me driving. only paid 4k.”
“Yeah, this is the key. On paper it’s affordable, but only if that missing $2k isn’t just disappearing. If you’re not already saving/investing it, I’d fix that before adding a car.”
“Been doing HVAC for 6 years now (Non-union, mostly service calls) been working out of a SUV or whatever I can get. I would love to get my own van/truck. New prices are crazy high and getting something used can be risky (although would an older GM van/pickup) Those who started out or if being on my place, what would you recommend? Sure I can get a new vehicle and barely scrape by monthly payments (lease or finance?), get a good condition van ( 10k) or keep struggling out of a SUV still. sub”
“My monthly take home is about 4500. Not counting the two extra paychecks you get when you’re paid biweekly. So probably more like 4800 My mortgage is 1920/month and I expect it to go down in September when they do the escrow analysis. I bought last year and have since applied for the exemption which dropped the taxes 1300/year. Also getting got a new insurance quote that’s a little lower. Utilities and internet are around 400-500 and I’ve been cranking the ac and heat irresponsibly. Phone is pai”
“I’m looking at a used car listed for around $22,000. I’d like to offer $17,700 cash, assuming everything checks out mechanically. That’s about $4,300 (roughly 20%) below asking. Is that a reasonable starting offer, or is it low that the dealer/seller won’t even take me seriously? For those who’ve successfully negotiated used cars recently, how much below asking did you start, and how much did you actually get them down? Also, does offering cash actually give me any negotiating leverage anymore,”
“It depends on whether your finances would be stressed by buying a replacement (and paying anticipated maintenance costs) that would satisfy you. If yes, keep this running and start a "replacement car" fund (which doesn't have to be an actual separate account). If you can comfortably afford a replacement, sit on the decision for a few weeks and don't fret which way you go.”
“I literally did! I bought my current car for that! The one that I drive right now! It's not just inflation though...”
“I encourage you to find something used a few years old with some miles. If it is indeed 0% apr that is a pretty good deal. You should be able to use the calculator on the dealer website for payment options. Otherwise they can run it through their financing. If this payment will financially put you in a tough spot for 3 years. You might consider holding off until you can afford this. How much you put down will entirely depend on what you can afford. You want to make sure you have some money in sa”
“Get a used one, can easily drop 10-15k off price. Toyotas are great and last. A 2023-2024 should be perfect”
“My spouse and I are in the process of looking into buying a new vehicle and the more I dive into it the more analysis paralysis I feel myself getting with regard to how to go about the process. We’re based in the US for market reference. My current car is actually the one I’ve had since high school, and it’s finally about to fall apart and needs to be replaced. For the new car, we’ve narrowed our selection down to 2 car models. Our intention is to keep the car for at least 10 years if not more.”
“Hi i am looking for some advice on how i should purchase my first new vehicle. I am 20 years old living at home while i save money to move out. I make roughly 55k a year as income but i save a huge portion every month (usually 2500-3000). My current assets are a 45k car fund, as well as 25k home down payment fund, 5k emergency fund, and other miscellaneous small goals. 3% of my pay is put into a 401k and that will be dramatically increased once i move out. I have had my eye on a Toyota Camry for”
“Hi, i’m a newbie. I’m buying my first car , and i want someone to guide me as i don’t have much clue. I can do chatgpt but coming from experience person would be really helpful for me . Thankyou. I am seeing one toyota 2012 , camry , clean titel but it has few damages , can anyone help me how much i should put in it submitted by /u/Long-Confusion-1301 [link] [comments]”
“With that credit score, financing over a shorter term (36-48mo) beats draining your savings, just get preapproved through your bank first so the dealer can't mark up the rate.”
“Myself, I'd put together $5k or so and buy a decent used vehicle. That's what my current car cost and it's been completely reliable, and I could replace it for the same today. So you'd have something to drive and you'd have some time. Then you could try to figure out if there was any way to make the repairs on your wrecked vehicle easier, maybe you could shop around, maybe there are parts you could replace yourself, maybe it would be worth it to part it out? I probably wouldn”
“Make the payment to yourself for 3-6 months, including insurance. If it sucks too much, you’ve saved money. If it feels worth it, you have more cash to put down.”
“Hi all, I am a 30 year old guy, I make 80k a year, own a house and drive a crappy car. I am also in the midwest for 80k can go pretty far. I have been wanting a new car for a long time and want to get what I actually want. The car is 40,000 and I would be looking at a $700 a month payment. My insurance would also go up from 90/month to $300/ month. I can comfortably afford to own the car but I have really been having a hard time with this one. I will definitely need a new car sooner or later. Wh”
“Thanks. I needed to hear it from someone that likes cars and not the obvious financial advice.”
“May not suit your situation but look at the lease numbers on new car and purchase at end of lease term directly from Toyota finance and not your dealer . Did this with rav 4 and saved thousands on the car. If your commute is as low miles as you say it will be a low mileage , under warranty , owned by you for the duration car with a much lower final sticker and possible tax benefits should you have a side hustle you can deduct payments with. Good luck”
“IMHO it borders on stupid because for the first few years depreciation will be a significant percentage of your income. But to get your own opinion, plan to pay in full from your HYSA. If you get a loan, it tricks your brain because you have a payment probably just under $1000, and your balance still shows 150k. It does show that a lot of it is spoken for by future loan payments. I would get a modest but nice car in the 25k range if you're into nice car. Get the cheapest car that's not a”
This is why I buy slightly used low mileage cars for cash.
“I lost my job and I am honestly at the point of desperation where I’m about to be evicted in the next few weeks. I have a 2023 Chevrolet Malibu that I’m still making payments on, and I’m wondering if there is ANY way to sell it to a private individual for a few thousand dollars while I continue making the payments on it. My thought was that someone could give me money upfront, take the car, and either make the payments to me or I could continue making the payments myself so my credit stays intac”
“Currently looking into getting a new car as my mom’s car is a 25 year old gas guzzler that has taken to leaving her stranded at work. The 2018 rav4 I have was given to me by my parents and that’s a big reason why I want to get a new one and pass the rav4 along to her. I make about 89k a year and I am looking at getting a rx350h premium or premium plus. I have no debt, don’t pay rent and my monthly bills come out to be around 1k dollars. I have about 150k in a HYSA and another 80k in my retiremen”
“Hey yall Will make this short: I have a 2011 Mazda 3 which I bought used back in 2017. Now it's 2026 and I really want to keep it as much as possible while I save up for a new one. Been wanting to get a brand new car like Mazda CX5 oe Honda CRV which I can use for the next 10+ years again. However I think it's breaking down earlier than I expected: Just replaced the shock absorbers / links = $850 Windshield suddenly has a huge Crack after parking. Replacement = ~ $400 Air-conditioning co”
“(1) You don't have to put a down payment on an auto-loan. Since it is a secured loan, there would be some loan-to-value restrictions, but so long as you aren't buying a car for $10k that the bank would say is only worth like $7k, that wouldn't be an issue. (2) Think about the big picture. A reason people put down money on a car is to save on interest (lower outstanding balance and generally better loan terms). So you want to put nothing down (not save some money on interest) so that”
“So I (24M) plan to buy my first car by the end of this year. I am specifically looking at cars on Facebook Marketplace, I don't want to buy a brand new car or a used car from a dealership, because it's more expensive, not to mention all the fees that dealerships charge. I am looking for older model Hondas (Civic and Accord) and Toyotas, (Corolla and Camry) because they are among the most reliable vehicles and they are built to last for a long time. I also want to buy a car full price Now”