Many drivers are spending over 30% of their monthly income on auto loans, car insurance costs also rising

Many drivers are stressed about high auto loan and insurance costs. (iStock)

Buying a vehicle is getting more expensive, with one in 10 drivers spending over 30% of their monthly pay on their auto loans, a MarketWatch study found.

The survey looked at 1,000 drivers and asked how their monthly car payments affected their finances and stress levels. About 40% of drivers can’t afford repairs and upgrades needed for their cars, the survey found.

Auto loans also prevent drivers from meeting other financial needs — 40% of drivers said they couldn’t afford basic essentials due to their high car expenses.

To make ends meet, drivers sacrificed spending in numerous other areas. About 25% stopped eating out as much while 13% of those surveyed stopped getting food delivery and directed that money towards car-related expenses.

High auto loans are contributing to more than just financial strain. Twenty-percent of drivers said they were «very» or «extremely» stressed due to overwhelming car costs, reported the MarketWatch study.

While you may not be able to save on your auto loan, you can cut your auto insurance costs by shopping around for different insurance quotes. With Credible, comparing quotes is easy, and takes just minutes.

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Auto loan delinquencies are on the rise

Auto loans have gotten high enough to the point where some drivers can no longer afford their monthly loan payment. Approximately 7.7% of auto loans became delinquent when annualized, according to the Federal Reserve Bank of New York.

«Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,» Wilbert van der Klaauw, Economic Research Advisor at the New York Fed said. «This signals increased financial stress, especially among younger and lower-income households.»

Loan balances rose substantially in 2023, continuing the rising pattern drivers started seeing in 2020. In the last quarter of 2023, auto loan balances rose by $12 billion, making the total outstanding balance $1.61 trillion.

Cutting down on your car insurance costs can save you cash on your car-related expenses. Comparing multiple