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Families who roll their car loans into a new car loan are all over the news this week. The deal sounds like a good one: you have an old car, and you still owe money on the car loan. You buy a new car, and the dealership “rolls” your old loan into the new car loan. Now, you have a new car, and just one loan payment. The problem? You now owe a small fortune on that new car. You’ll owe so much money that you can’t sell the car without taking a huge loss. And if you were tired of that old car that you traded in, think how you’ll feel in six or seven years when you are still paying for your “new” car. Auto loan debt has been on the rise for some time. In addition to heavy mortgages, Americans are finding themselves saddled with big debts for their cars. The average auto loan stretches for five years- and almost half of all auto loans go for more than six years. Before you start shopping for a new car, think about how much you can afford. If you are stuck with an old car, and you’re still making loan payments, keep making the payments until you at least match the market value. Ideally, you want to make some money when you sell your used car. But if you can’t make a profit, strive to break even. Rolling over car loans is a recipe for disaster. Find out how much car loan you can afford before you start shopping. Get competitive quotes for auto loans online at comparison websites like LowerMyBills.com. At the same time, try listing your used car in the classifieds to see if you get any interested buyers. Only then should you begin to look for a new car.
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