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Consumer Reports has been investigating growing car-related debt and have found that many consumers are paying too much for their car loans. In one example, a new car loan for a 2018 Toyota Camry charged 19 percent APR resulting in a monthly payment of $823, while the average APR for consumers with similar credit was only 4.5 percent. By the time the loan is paid off, the consumer would have spent more than twice the sticker price of the vehicle.

On average, Americans spend a monthly average of nearly $600 on new car loans, an increase of about 25% from a decade ago. Most borrowers are able to make their payments but people have been increasingly defaulting on their high-interest loans.

In order to reduce your loan costs, make sure you shop around for a car loan. You can also get pre-approved from your bank or credit union, which may influence the dealer to give you a better deal. Know and improve your credit score and stick to your budget. Lastly, make the biggest downpayment you can afford, as this will minimize the amount you’ll have to borrow to purchase your vehicle.