If you’re a Texas retiree, you may live on a strict budget. So when it comes time for a major purchase — like a car — you may rightfully wonder how a loan would fit into your monthly expenditures and whether you can afford it.
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GOBankingRates recently analyzed new and used vehicle loans in Texas. We looked at recent interest rates and vehicle prices and calculated average monthly loan payments across multiple vehicle types, including SUVs, trucks, electric vehicles and sedans.
Our study assumed consumers chose a five-year auto loan with a 20% down payment. Based on those factors, here’s what an auto loan will cost you in Texas.
How Much a New Auto Loan Costs in Texas
New SUV
- Average auto loan rate: 7.20%
- Average auto loan total cost: $47,298
- Average auto loan monthly cost: $756
New Truck
- Average auto loan rate: 7.63%
- Average auto loan total cost: $47,405
- Average auto loan monthly cost: $763
New Electric Vehicle
- Average auto loan rate: 4.14%
- Average auto loan total cost: $46,550
- Average auto loan monthly cost: $702
New Sedan
- Average auto loan rate: 8.47%
- Average auto loan total cost: $47,615
- Average auto loan monthly cost: $779
State Average for All New Cars
- Average auto loan rate: 7.55%
- Average auto loan total cost: $47,385
- Average auto loan monthly cost: $762
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How Much a Used Auto Loan Costs in Texas
Used SUV
- Average auto loan rate: 11.93%
- Average auto loan total cost: $25,963
- Average auto loan monthly cost: $452
Used Truck
- Average auto loan rate: 11.88%
- Average auto loan total cost: $25,956
- Average auto loan monthly cost: $451
Used Electric Vehicle
- Average auto loan rate: 10.59%
- Average auto loan total cost: $25,777
- Average auto loan monthly cost: $438
Used Sedan
- Average auto loan rate: 13.18%
- Average auto loan total cost: $26,138
- Average auto loan monthly cost: $464
State Average for All Used Cars
- Average auto loan rate: 12.20%
- Average auto loan total cost: $26,000
- Average auto loan monthly cost: $454
4 Tips for Getting an Affordable Auto Loan
It’s no secret that interest rates are higher than five years ago. However, that doesn’t mean you can’t secure an auto loan that fits your budget. Here are a few ways to optimize the shopping process.
Check Your Credit Score
Before applying for an auto loan, check your credit score. Lenders typically provide the best rates to people with a credit score that exceeds 700. If your score falls below that, it’s worth looking into why. If you have any outstanding collections or late payments, you should rectify those before applying for new credit.
While you can’t change the past, paying off collections will reduce their impact on your score. If you missed a payment, you can talk with your creditor. They may be willing to remove the report if you explain what happened. Keep in mind they’re not obligated to remove adverse reports, but it’s worth trying if it’s the main factor impacting your credit.
Decide What You Can Afford
Before heading to the nearest dealership, it’s a good idea to determine how much you can afford for a vehicle. That way, you can stick to a baseline amount as you browse the cars on the lot.
While affordability will vary depending on your financial circumstances, a rule of thumb is to keep your monthly payments below 15% of your monthly income.
Check Your Bank or Credit Union’s Auto Loan Rates
Some banks and credit unions offer special auto loan financing options. Sometimes, financing from a traditional lender may be cheaper than a dealership’s. Consider visiting your local bank branch to find out about your lending options, or check the website to see if any are listed.
If your lender preapproves you for an auto loan, it may make it easier to shop at the dealership. Some dealers may also offer you an even better rate on their in-house financing, lowering your borrowing costs.
Avoid Extras That Inflate Your Loan Costs
Dealers may try to sell you an extended warranty or special insurance, which can hike up your loan costs. By saying no to these extras, you can keep your loan amount exclusively to the price of the vehicle.
Methodology: For this study, GOBankingRates analyzed each U.S. state to find the average auto loan rates. Using Edmunds’ car loan rates from August 2024, the auto loan rates were found for SUVs, trucks, electric cars and sedans, as well as the overall average for used and new cars for each state. The average total cost for an auto loan can be calculated by using the average used car and new car price, as sourced from Kelley Blue Book, assuming a 20% down payment, and using five years for the loan term. The monthly and total auto loan costs can both be calculated for all states and car types. Using these filters, the total cost for an auto loan can be calculated for each state with different car types. All data was collected on and is up to date as of Sept. 5, 2024.
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This article originally appeared on GOBankingRates.com: Here’s How Much an Auto Loan Will Cost Retirees for a New or Used Car in Texas
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
