Americans in a hurry to buy a car may get stuck on high interest rates and bad debt conditions

• Americans flock to car dealers President Donald Trump’s automobile fares before it could lead to an increase in vehicle costs. However, when fighting over expensive vehicles and high interest rates, consumers may not be financially equipped to make these large purchases, leading them to defaulting on the line’s debt.

New car buyers considering dodging car rates can suffer unintended financial consequences as a result of long loan terms and high interest rates.

President Donald Trump 25% automatic pricing The introduction in late March has made new car purchases in the US disrupted, but as a result of these high-priced purchases, new car buyers could take longer to repay and take away high-interest loans than waiting for the vehicle to be purchased.

Even before Trump’s car rates were threatened Both car hike prices and insurancecar prices have already been high as a result of the pandemic –It’s approaching $48,000 Average trading price per car shopping website Edmunds. When interest rates exceed 7%, buying a car usually requires you to rent a significant change, said Jessica Caldwell, director of insights at Edmunds. luck. 

To reduce these sudden prices, Americans have extended the length of their loans, with about 20% of car loans currently being extended on the seven-year terms, according to Edmunds. The outcome for consumers may be that they have added themselves with a greater financial burden in a hurry to avoid price increases due to tariffs.

“People are buying something right now because they know there’s a timeline related to this,” Caldwell said. “The real risk for a lot of people is that they’re in the car. They’re not necessarily ready to buy or they made a snap decision a little earlier. They can sign up for adverse loan terms or monthly payments.”

The inevitability of rising automobile prices

Car dealer saw it The wind gust of activity When consumers race to find new vehicles before bringing a wider, tariff-only vehicle into the lot. Hyundai We reported the best sales in April, seeing a 19% increase from the previous year. Nissan Similarly, US sales increased by 10% in March compared to the previous year. According to the Bureau of Economic Analysis, the sales of light trucks and SUVs in March and April showed annual sales rates of over 17 million people each. data Regarding the sale of seasonal vehicles. In the same few months of the previous year, the annual rate was around 16 million.

This trend is justified, according to Kishore Kulkarni, a professor of economics at Metropolitan State University in Denver.

“We’re almost guaranteed to see future prices rise,” Kulkarni said. luck. “And if you’re ready to buy a car, you’re better off buying it today.”

Certainly, I have the price of the car It remained stable According to the Bureau of Labor Statistics’ Consumer Price Index, compared to the previous year $9,000 more expensive They were more than before the pandemic. I have Trump but Mitised the impact According to Jason Miller, an associate professor of supply chain management at Michigan State’s University of Wide Business, consumers should expect prices to rise as a result of a turnover as a result of the tax on automobile fares by rewinding taxes on certain imported auto parts. With car dealers The profit margin is very lowthey have no choice but to raise prices.

“Given that their margins have returned to where they were before Covid, there is no way, on absolute terms, that they essentially absorb the higher costs of tariffs and cannot pass a significant share of that to the buyer,” Miller said. luck.

New car owners may be avoiding a tariff headache, but there is no financial risk. Non-ideal loan terms make it difficult to trade it on the line, as the car could be more liable for the car than actual value or negative equity. The proportion of borrowers more than negative equity stocks, or cars, was worth it, increasing by 0.4% in March. data Cox Automotive suggests an increase in future default rates.

Edmunds’ Caldwell said the move over tariffs would put dealers in a challenging position. Dealers may be reluctant to accept trade because there is so much uncertainty about how long tariffs will be introduced. They can buy cars at high prices due to tariff-related price increases, but costs thousands as taxes are no longer relevant before they can resell the car.

Financial Tradeoffs

A rushed decision to make a big purchase will have a ripple effect on your finances. To offset the impact of car loans on budgets, consumers can pinch pennies with other purchases, Kulkarni said. What this might look like for high-income Americans Select a vacation plan. For low-income families, this could mean reducing the purchase of food and clothing.

Also, consumers may need to make long-term trade-offs. Miller said recent car buyers have opted to pay a higher interest rate on their vehicles instead of waiting to refinance after their rates fell. But interest rates may do so Please leave it the same. By the time they are low enough to refinance in more favorable terms, consumers will likely have greater financial problems.

“The Federal Reserve will have incredibly good confidence until we see evidence that these tariffs are not inflation or that the economy needs to do something,” Miller said. “And unfortunately, at that point, that usually means we’re in a recession.”

Despite these risks, interest rates are unlikely to fall anytime soon, and there is no chance that new cars will inevitably rise in the coming months. Caldwell said she would be in the dealership crowd if she were in the position of many Americans looking for a new car.

“The motivation to buy a car is very different from the rest,” she said. “When people need cars, they need cars.”

This story was originally introduced Fortune.com