According to AutoTrader, in June the average new vehicle went for $66,288! That’s a huge amount and over 20% higher than the year before.
Prices are on the rise because inventory levels are low and demand is high.
And with those higher prices, come larger loans and longer terms. And those loans are even more costly right now thanks to higher interest rates. It’s tough out there.
Which means it’s even more important than ever to pay attention to just how much you’re paying for cars and car-related expenses.
Why? Three reasons:
1. It’s usually a lot, like a significant portion of your monthly budget
2. Cars lose their value over time
2. And there’s often a lot of wiggle room to save money
Now, if you drive to work every day, obviously you need a car. And beyond getting a fuel efficient vehicle or going electric, there’s not a whole lot you can do about high gas prices.
But it’s also easy to get into the habit of overspending on vehicles. Getting a bigger truck or fancier car than you really need. Upgrading all the time so you’re constantly on the car-payment hamster wheel.
When the pandemic hit, my wife and I got rid of our second car and now I can’t imagine ever going back. Even if we have to Uber a few times a month, or even rent a car once in a while, we’re still saving thousands of dollars every year. Money that’s now going toward our long-term goals and assets that will increase in value over time.
So what can you do?
Don’t buy cars to impress people. Don’t buy more cars or more often than necessary. Go used (though even those prices are on the rise, too).
And finally, to minimize the cost, you should explore using a Whole Life insurance policy to buy your next car. It requires a bit of planning but can help get you farther ahead over time and prevent you from relying on car loans.
If you want to go over the numbers and see how this works, shoot me a message.