Apr 15, 2021 / Auto & RV

How does your monthly car payment compare?

Cars can be expensive. There’s the purchase price, the cost of financing, the cost of maintenance and repairs, and last but certainly not least, the cost of gas. That latter of which, in particular, has been on nearly everyone’s mind, every time they pass the pump. With all these costs, it’s no wonder more drivers are trying to find ways to reduce their monthly expenses. And the best place to start is to compare your costs with national averages to see where you can cut back.

Keeping Costs in Proper Perspective

Gas prices are indeed skyrocketing. They’ve climbed 9 percent from last month and more than 22 percent from last year. And, there’s no sign of slowing down. In fact, gas prices are expected to reach a three-year high this summer. But, as with most everything else in life, it’s all relative. And, it’s always a good idea to keep the cost of gas in proper perspective. After all, at least your car doesn’t run on bottled water.

Potential environmental benefits aside, if you’re just looking at price alone, the average gallon of regular gas in Utah costs about $3.16. That’s compared to more than $3.50 per gallon of milk, $10 per gallon of Gatorade, $21 per gallon of bottled water, and (hold your halitosis) more than $84 per gallon of mouthwash. Still, rising gas prices aren’t ideal. Especially if you have a gas guzzler, the next few months are going to be expensive, particularly if you drive a lot.

The Average Cost of Financing

You’ve already bought your car, so there’s not much you can do about the purchase price. You can spend a little extra upfront to keep your car working well and do your best to avoid future repairs, but for the most part you pay for repairs as they come. And, there’s not much you can do about the price of gas, other than trying to drive less. The one expense you may have instant control over is your financing costs. So, how does your car payment compare to national average?

According to Experian, the average American pays $568 a month for a new car and almost $400 a month for a used car. The average lease payment is somewhere in between, about $467 per month. Like gas prices, car payment prices are steadily rising. In fact, the average car payment has gone up each quarter since 2015. This is a combination of several factors, including original car price, interest, taxes and fees, and loan term. But if you’re looking to lower your monthly payment, you’ll want to focus on a refinance that can lower your interest and/or lengthen your loan term.

Cash Guzzler of a Car Loan?

If you have a cash guzzler of a car loan, a refinance can help you bring that monthly payment down to a much more manageable number. Especially if you financed your car purchase through the dealer’s preferred lender, there’s a great chance you can get a better interest rate with a refinance. In addition to saving money with a better interest rate, you can lengthen the term of your loan, which will reduce your monthly payment obligation, but may add interest over time. Both options can help you trade in a cash-guzzling car loan for something much more efficient on your finances for the upcoming summer months.

How do your current car payments compare? If you’re looking to cut back on monthly car expenses, especially in light of impending increases in gas prices, the right refinance can help you save money and/or lower your monthly payment.  Check with one of our helpful loan specialists to see if a refinance is right for you.