6 Financial Sacrifices People Have Made To Afford Cars — And What To Do Instead
Written by
Tobi Opeyemi Amure
Edited by
Amber Barkley
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Car ownership is now the gut-wrenching trade off for millions of Americans. Drivers are using emergency cash, deferring healthcare and working two jobs to keep their cars running as auto and interest rates have become increasingly difficult to afford.
Unfortunately, many customers discover — often too late — that nightmares of debt accompany their dream automobiles. This article highlights the lengths people will go to get their cars and how to avoid making decisions that may ruin your finances.
Taking On Large Loans
Many consumers are taking out expensive loans to buy vehicles. According to Experian, the average car loan was $40,927 for a new vehicle in late 2024, and the average monthly payment was $737. This is worrying, as it can lead to long-term financial problems when consumers owe more than their cars are worth.
Affordability is the answer to this problem as far as the consumers are concerned. Tom Holgate, EVP of auto finance and insurance at Way.com, said the number one rule when applying for a car loan is affordability.
“If you lose part or all of your income, consumers should wonder if they will still be able to make payments,” Holgate said.
Before signing an expensive loan, review your budget and look for a cheaper one. Furthermore, you should investigate making a more significant down payment to lessen the loan amount and the monthly payments.
Extending Loan Terms
Many consumers use car payment extensions to make the payments more manageable. According to Experian, the average car loan lasts over 72 months — six years. A longer loan term typically means lower monthly payments but more in total interest over the lifetime of the loan.
If you must extend the loan term to afford the monthly payments, the vehicle is too expensive for you. Consider looking for a cheaper vehicle or waiting to purchase until you’ve saved a larger down payment.
Cutting Back on Essential Expenses
People are cutting things like groceries, healthcare and housing to pay for car payments. At times, this sacrifice can have a great impact on overall quality of life and even long-term financial health. Cheap food and postponing medical checkups are just some of the choices some consumers are making to cut costs to pay their car payments.
If you require a personal vehicle, consider buying an affordable model or one of the dependable used options instead of a new one. Before deciding how much to spend on a vehicle, make a detailed budget, including all your income and necessary costs — including what you’ll be paying on the vehicle.
Instead of cutting important expenses such as food and healthcare, reevaluate your transportation needs and see whether you have other alternatives.
Relying Too Much on Gig Work
While picking up a side gig can be a good way to pad your savings, Holfgate said it may not be a sustainable option.
Side gig income can vary by the gig you choose, the time you dedicate to it and even the time of year.
If you want to up your income by taking on gig work, don’t let it interfere with your primary job or personal life, and be aware that you may not always make enough to cover your car payment. Opt for a vehicle you can afford without the extra work, if you can, and let your side gig income be bonus money rather than needed money.
Overusing Credit Cards
“[Credit cards] may give some short-term relief, but if they are not appropriately managed, they lead to … growing debt,” Holfgate said.
If you’re not able to pay off the credit card in full every month, you’ll end up paying much more in interest, whether you’re using the card to make your car payment directly or on other essentials to free up money for your car payment.
Use credit cards wisely, and do not carry a balance over from one month to the next. Consult with a credit counselor and set up a debt management plan if you have debt.
Compromising on Vehicle Quality or Features
Lower-quality vehicles or opting to bypass features you want may be cheap now but may cause problems later. Higher maintenance costs and lack of safety features, in particular, can end up costing you far more over the long term.
Do your research and get a reliable vehicle that fits your requirements without exceeding your financial constraints. Check vehicle reliability ratings, then look at certified pre-owned options that include warranties.
If you’re considering an older or high-mileage vehicle, it is best to factor in the associated maintenance costs and verify them with a reliable mechanic. Choose a car that will give you good value for money and will last — all while keeping costs down.
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