Young Adults Crushed by High-Interest Car Loans
169 posts across 17 communities in the last 30 days; 73% from r/personalfinance.
“Seems like if you can't afford the payments, giving money in advance to make them lower doesn't really make any sense. [re: Stuck in a 2025 Ford F-150 Lightning lease with $27K negative equity. Currently unemployed. What are my options?]”
“I've said this before, here it is again. You all need to quit buying these cars with big loan payments that are longer than the warranty if you don't have a healthy savings account. Signing a 5 year loan on a car with a 90 day warranty is a terrible idea that potentially leads…”
“What’s the car worth? You can get into something else but it will probably cost you more which doesn’t really solve the problem. I would suggest looking at your monthly budget. Cut out everything that’s isn’t food and rent / necessities. Pay down the car if you’re upside down…”
Young adults are struggling with high-interest car loans, often obtained out of necessity or desperation. These loans frequently involve used vehicles, leading to unexpected repairs and financial strain, making it difficult to maintain payments and build financial stability. Many feel trapped by unfavorable loan terms and limited options.
SOURCES (60)
“I am struggling with interest rates, keep getting quoted 11-15% apr, im trying to budget for a 15000 car. Why not save enough for that, and just pay cash. Then there's no APR! Also, insurance is often not cheap, let alone gas and registration. Car…”
“It's worth talking to a bank anyway. A secured loan (backed by the car) is probably going to be more doable than an unsecured loan (e.g. credit card). [re: This may be the wrong sub, but I’m looking for advice about my car loan.]”
“I think the problem is you present a loan arrangement which is very unusual to the point that it seems more likely that you don’t understand the loan structure. Almost no car loan is structured to “pay off the interest first”, so if this truly is the arrangement you would actually need to post the specific language of the loan agreement to get good advice. What is the interest rate on the loan? How is your credit? I’m assuming not great giving you mentioned that you’ve had to miss payments, but”
“OP, whatever kind of loan you got for the Kia is not a common situation at all. I've never heard of it and judging by the comments here neither has anyone else. I also live in Minnesota and have gone through dealerships several times for loans and have never seen anything close to what you are describing. What were the original terms for the loan on the Kia? [re: This may be the wrong sub, but I’m looking for advice about my car loan.]”
“It’s a high interest loan, that is for sure and I reach loan maturity next October, either pay it or they just take it. [re: This may be the wrong sub, but I’m looking for advice about my car loan.]”
“Am I understanding this correctly? Over the 7 year life of the loan you have paid nearly $55k in interest alone and have yet to touch the principle? If so, this is just crazy that options exist like this. That bank made a fortune [re: This may be the wrong sub, but I’m looking for advice about my car loan.]”
“Seems like if you can't afford the payments, giving money in advance to make them lower doesn't really make any sense. [re: Stuck in a 2025 Ford F-150 Lightning lease with $27K negative equity. Currently unemployed. What are my options?]”
“Except the vehicle OP is buying is actually $42k [re: Think they messed up my car loan, need help on math to see if I’m crazy]”
“https://imgur.com/a/v5BHLfT From what I can tell what I assume is the error is the top of the itemization being 8-9k over the price of 33k [re: Think they messed up my car loan, need help on math to see if I’m crazy]”
“I’m 27 years old and live in Kentucky. I’m trying to buy a reliable vehicle, but I’ve gotten around 7 denial letters from lenders, and I’m starting to feel like I’m out of options. I’d really appreciate honest advice from anyone who has experience with auto loans, credit unions, or rebuilding credit after a repossession. I'm currently driving my dad's old work truck that is in my mothers name since he passed, and she will not let me buy it from her. It's not in great shape and has al”
“Sell car. Buy a used reliable Toyota for $8k cash. Usmobile.com for cell phone. If you are making payments on the cell phones, buy used $50 Motorola android devices (that still get security updates), sell current phones to recoup cost. Get your internet down to $30/mo. Call and threaten to cancel. Keep doing it. I got spectrum down from $100 to $30. (if your download speed is more than 100meg and upload more than 10, thats all you need) [re: I am up against the wall and have no clue what to do!]”
“Buying a car from a friend for $45k, private sale. I have the cash just sitting in a HYSA earning 4%, was planning to just pay cash and be done with it. But then I saw my local credit union is offering 3.99% APR on auto loans with no prepayment penalty. So now I'm thinking: finance like $30k of it, leave the cash in the HYSA, and pay the loan off in a year or so. Quick math says I'd pay maybe $600ish in interest over that year while the HYSA earns more than that on the $30k, so I'd t”
“Evening all. I have a 2015 tacoma with 105k miles that blue books about 22k on trade I owe 8k. The APR is 6.29 and I spend about 15% of my take home on transportation costs. I’ve been aggressive paying it down for the two and a half years I’ve had it, but I’ve been looking at used hybrids. My worry is gas prices will continue to get worse and my commute distance may go up a good amount next year. There’s a local 2017 Chevy bolt with 68k miles they’re asking 11.5k. With trade I could come out wit”
“I have a car with positive equity (65% paid off). It has had some issues at just 4 years old and I now know the engine is not the most reliable. Has 50k miles. Had the accessory drive belt shred during extreme heat this summer which overheated my engine and ran through all my coolant, just did new brakes this year. Has an ongoing recall for fuel injector issues that might cause combustion with no fix in sight. I can put my equity on a new car and have a slightly lower monthly but starting over o”
“No reason Pay it off and start w car fund for the next one!! [re: Is there any reason I shouldn’t immediately pay off my car?]”
“I plan on buying my parent's car outright when their lease is up (selling my current car and then paying the difference out of pocket). I currently have 45K+ in a Capital One HYSA, that is my emergency fund, raking in 3.10% of interest. I was thinking of either: A: Mark 40k as my emergency find and any money I put into it after that is for the car payment. This allows interest to do it's magic with a balance that is already there. B: Leave that money alone and put 5K and whatever future”
“Filed Chap 7 2 years ago, did not reaffirm the auto loan. Been payign, but so underwater with it and now it needs some repairs and maintenance, it seems to be stupid to put money in it. I have read for a voluntary give back you could be taxes on the value of the loan vs what they sell the car for, but if you had a discharged Chap 7, there is not tax liability. I wanted to make sure that is correct. submitted by /u/ant1Ellie [link] [comments]”
“Good morning/afternoon/evening everybody! I’m attempting to get a new vehicle financed for 26,600.00 with 1,500. I talked to the dealerships finance guy, and they started my interest rate off at 15.00% and will only go as low as 9.79%. Despite having a credit score of 700-710 I was told they couldn’t go any lower due to having a weak credit history. I have an income of 3,300.00 Questions I had - am I getting one pulled over on me? - are there financiers that are likely to offer better rate’s? An”
“Now I’m left with everything and I just can’t afford it. Is there anyway I can get out of this car loan and get something cheaper without taking a huge loss? submitted by /u/PopularMidnight3661 [link] [comments]”
“i’ve read online after thirty days a late car payment will get reported and will negatively impact your score. i was wondering if the 30th day was the final chance before credit score gets hit or the following day (31st) submitted by /u/HeartofLion5 [link] [comments]”
“My car loan was 6.25% and I just double paid each payment and put on the second check to principal and I paid it off in about two years of my 48 months but I did put a $2,500 down payment. [re: Is there any reason I shouldn’t immediately pay off my car?]”
“I've said this before, here it is again. You all need to quit buying these cars with big loan payments that are longer than the warranty if you don't have a healthy savings account. Signing a 5 year loan on a car with a 90 day warranty is a terrible idea that potentially leads to this exact situation. OP, you're stuck with this problem now. The only way out is to pull savings you don't have to pay the car off right now or roll the negative into the next one. It'll almost cert”
“From your post history this is a 13 year old altima so likely nobody as your DTI on it already is sky high. You can roll negative equity into new loans, but not when the DTI is so out of wack. Personal loan if you don't have bad credit would likely be your only option to take care of this and payoff the loan while you get another car, or to go without. [re: Rollover Car loan questions]”
“I have a 2013 nissan altima 2.5 SL sedan through carvana. I have 7000 dollars left to pay on the car, but the transmission went to shit. I cannot afford a new transmission, or the time spent getting it fixed. I was looking into trade in/rollover loans and Carvana will only pay $900 and others $250 toward the car so I’d have about $6100 dollars left on a car with 200k miles and transmission issues. My question is, is there any other financial way to go about this? Also, what dealerships will acce”
“I had to send a check in for the payoff amount [re: First car, wanting to pay it off in full]”
“Is this a bank or some sketch lender? [re: First car, wanting to pay it off in full]”
“I got my first car a few months ago. I did have the money to pay in full when I got it but im stupid and didn’t, not really sure what was going through my head. I didn’t realize how much extra I was going to pay in APR. But I decided I might as well pay it off now so I don’t pay even more in interest. How exactly do I go about this? The lender im with has a payoff policy and no penalty. It says that I can do it through check, money gram, or through phone by providing my banking information. I wa”
“Just make sure there isn't any prepayment penalty...there likely isn't, but worth checking out before you pay it off [re: Is there any reason I shouldn’t immediately pay off my car?]”
“I’m getting paid 0.50cents per mile. I just got a brand new car with 400 miles on it. I bought it September 8th. It’s not October 15th and I have over 4k miles already on it. And I owe 24k on it. Should I look for a new job? Is the pay worth the run down on my car? submitted by /u/Least-Donkey-861 [link] [comments]”
“Been saving for a car for many years and pulled the trigger 2 weeks ago. My dad convinced me to consider financing so that I would have money left over just in case of an emergency. When we actually went to buy the car, they gave me an interest rate that was higher than I had planned on. I got 6.39% for 48 months. Bad timing on my part with interest rates going up, oops. Now here I am: still with enough cash to pay off the car in full. I have a separate savings account that has 6 months of expen”
“I don’t have good credit, but I have managed to make payments on my car for as long as I’ve had it, with it being late only once 3 years ago. Ive racked up some credit card debt, about $3000 worth due to losing jobs, and making dumb decisions, I can admit it. Not to mention student loans are needing to be paid and I’ve had to ask for extensions because I just don’t have it. I have various payments from other places that have gone into collections. I can pay only the minimum payments of my credit”
“Hey everyone, I’m looking to refinance my auto loan with a credit union however I’m not entirely sure which term to pick. I’m getting mixed responses from relatives so I’m not entirely sure which is better. Current loan: 72 (currently at 60/72) month, 540$ monthly, 10.03% Credit union offer: 52 months, 567$ monthly, 6.99% or 60 months, 503$, 6.99% Regardless of whichever term I pick I’m going to continue making 600$ payments, so I’m not sure if it’s better to have the extra 100$ go towards the p”
Ohhh this is a good strategy [re: smartest way to pay off car loan?]
“I’m getting the same loan rate with a max increase of 2 percent years 6-10. Since 7-7.5% is the going rate anyway I do not see much risk [re: Is a 5/5 ARM rate good at this environment ?]”
“Fair enough. if you trade in, maybe a used corolla instead of new so the 10k doesn’t stack on a full new price. and get preapproved at a credit union first, dealer rates at 650 could be rough [re: My 2020 ford s fusions trans went out]”
“man that sucks. but rolling 10k negative equity into a new car at 16% would bury you for years. Check if you got carvanacare when you bought it, people forget about that all the time. if not, call some independent shops about a used transmission, way cheaper than 6-7k. fixing it hurts now but it’s probably still cheaper than the trade in [re: My 2020 ford s fusions trans went out]”
“Car payments gonna come out to the same thing unless your getting a 4K cash car? I’d keep the Beamer and just do a 4K cash car to avoid payments, but the cash car might start doing the same thing to you. Really tough to say but 7k in repairs vs 10k payments and interest the Beamer still best choice for now but you know how much money you have and your situation best [re: Is it stupid to keep fixing my car when the repairs exceed the value of the car?]”
“As the title says, I owe $16k on my Jeep Renegade year 2018. I don’t know how banks and dealerships work to the extent of knowing how to get out of this car so I can nab a different one. Nothing wrong with the car. I take GREAT care of my stuff. I’m just more interested in a car I either don’t have to pay for like a straight cash buy or a fleet vehicle I’ll use for snow plowing or something that will slowly help pay itself off faster. What are my options? submitted by /u/Creepy-Marsu”
“Hi, I’m 24 years old and make 60k a year in BC, Canada. I live at home and probably will for quite a while yet as this is the cultural norm for my family. My vehicle loan has roughly $33k on it and my TFSA has about $23k in it. It’s a 5 year loan, at a 6.59% interest rate. My question is would it be worthwhile to just cash out the TFSA and put it towards the vehicle loan? Or is it better for me to make my regular monthly payments and continue to made additional payments of $500 biweekly to pay i”
“Title. I tried applying for an auto loan through a credit union and they rejected me because of my credit and employment history. I don’t know if I have any other options except to tough it out and save up for a year and buy in cash. If anyone has suggestions on what I can do or maybe some cheap and reliable cars to look for, or just any advice at alp it would be greatly appreciated. Edit: Thank you guys for all the insight, I learned a lot, and I really appreciate all the different ideas &”
“If there's $23k of loan left and you get $16k for the truck you have to come up with cash for the difference. But yes, if you can do it, do it. [re: 24.5% Auto Loan Help]”
“check with the car loan company to get the final payout amount. a lot of these loans have prepayment penalties [re: Was recently gifted $19k and not sure how best to utilize it]”
“What did you actually sign up for that was a negative? You got burnt on a car repair, happens to everyone, even the smart.. no biggie. [re: Should I let my car go back? Idk what to do.]”
“For context: 28M with $50K in VBIL to buy a car next year. I plan to keep it 10 years, before buying a new car every 10 years or so after that. I have a 795/780 credit score and access to a 4.7%, 5 year auto loan from my bank. Or I could finance through the dealership at 5% for 4 years. From my perspective, I have a few options on how I can buy a car every 10 years: Buy the car 100% cash, then save a few hundred every month for 10 years in mostly bonds/bills. Repeat. This option presents a lot o”
“Are you for real? [re: Owe $15K on a Jeep with a blown engine. $11K to fix. What are my options?]”
“I financed a new car back in 2023 for 35k. The monthly payments are 570$. At this point, I have paid off almost 50% of my car loan. I havent felt any pressure about it up until recently. Ive experienced some troubling car issues despite it being a newer car - and it is outside of the warranty. The dealership scared me a bit saying the issues "could lead to a 3.6k run of tests, not even counting repairs". I understand this was probably a scare tactic. I did consider trading in. When ask”
“M21 and I make around $120k before taxes after taxes probably around $80ish k, anywho I got myself into a unfortunate position with my vehicle, all started when my ex gf’s dad co-signed for my vehicle 3 years ago I was 19 barley making the payments in the vehicle but got it because it was nice and not a crazy amount of money the vehicle listing price was $43k, was also an idiot and put los of km’s driving around being young and dumb, lost about $10k on the car because when I broke up with the ex”
“What’s the car worth? You can get into something else but it will probably cost you more which doesn’t really solve the problem. I would suggest looking at your monthly budget. Cut out everything that’s isn’t food and rent / necessities. Pay down the car if you’re upside down. If you are not upside down save up 5k and buy a cheap reliable car. Take the $ you were putting into the car and save it. In 4 years buy a car with that money. Continue to do this. Never have a car payment again. [re: Look”
“Similar scenarios get posted often and there are only a few options and all of them end in the same result: paying off the car. There is no magic sauce. You either: pay it off in cash and keep it, sell it and either have positive equity after selling or take a loan to cover the shortfall. You could refi to a lower rate if you can get approved but it sounds like your credit has tanked. [re: Looking to get out car loan but I don’t know the best option]”
“Doesn't sound like you can go without a car right now, nor do you have the cash after getting rid of the car to buy much of a working beater. On top of that, your credit isn't in a place where a cheaper car will be all that much cheaper. So it sounds like keeping the current car while working on your earning potential and credit is the only real option you have. [re: Looking to get out car loan but I don’t know the best option]”
“Yes. You bought a nearly 30k car at 18. I assume you werent making nearly enough yo justify that. I make good money at 30 and wouldnt finance 30k let alone for 78 months. [re: Did I make a bad car financial decision? (18yrs old)]”
“If the debt is student loans or a sizeable percentage of it is, that's not unusual and wouldn't have me too worried. If it is primarily automotive, the average new car sale prices is now in excess of $50k, they're deffinitely running tight and I would be midly concerned. If it is primarily medical, yeah, our system is messed up and they got caught up in it. That can be negotiated, fought, delayed for years. Wouldn't be overly concerned. If it is primarily consumer credit card deb”
“Other people have more advice about what to do about the car but you gotta attack that credit card with 29% interest rate. If you can throw every extra dollar at that in the next couple months you should be able to pay it off by Christmas. Then move on to the other credit card debt. The other necessary step is identifying what led you to get in that much credit card/consumer debt in the first place and make a plan so that doesn't happen again. [re: Financial debt help!]”
“It’s because his credit is shit and she’s hoping in 6 more months, it won’t be. [re: Fastest way to get out of my horrendous car loan?]”
“I am looking to rebuild my credit after a Chapter 7 filing 2 years ago. I’m also contemplating buying a new used car in the near term. Rather than get gouged on APR, I am considering a secured share loan for the price of the car. I’ll make payments each month and when it’s paid off, I’ll have the released funds available as a down payment on a home. Thoughts? submitted by /u/mratltodc2u [link] [comments]”
“Payment comes out at $600 per month Vehicle is SUV (Honda, Subaru, Hyundai, Kia, Mazda) submitted by /u/Desertedfoxx [link] [comments]”
“My only debt is my car. I owe $11k, $620 payments, 3.9% interest. I will finish in July 2028 mas o menos. I make $50k a year. My current savings are $10k. 3.1% interest. My goal is to reach $20-30k in savings total next year. I like seeing my savings grow so I'm in no rush to pay my car. But I would also like to get rid of this monthly payment too lol. I'm not sure how to tackle it or if I should just ignore it and keep saving money. submitted by /u/Desertedfoxx [link]”
“Hey friends, Luckily I've gotten to the point where I am basically debt free except for my car ('23 VW Jetta.) I owe about $19k and it's worth around $16k according to KBB. (Upside down slightly because my previous car has too many issues and I just turned it in for a more reliable car instead of paying to fix it.) I did refinance and was able to cut my interest rate in half. I have been throwing an extra $100-$200 on top of the monthly payment just because I want to pay it down ASAP”