Vehicle owners locked into a high interest rate should look into whether refinancing could lower their monthly payments, sid Vittorio Scafidi, vice president of lending at Westbury-based Jovia Financial Credit Union. Credit: Newsday/Howard Schnapp
Lauden Hendricks and his girlfriend both did their homework before they bought their used cars.
Hendricks, 25, of Saint James, paid upfront for a 2010 Toyota Corolla in November.
"I bought it at 63,000 miles, so as long as I'm smart about it, I think I'll be able to keep it for at least 150,000 more," Hendricks said.
His girlfriend, Caitlyn Cohen, 26, also of Saint James, bought a 2020 Subaru Forester in 2023. Her loan payments are under $400 a month, she said.
Both avoided the high cost that might come with buying a new car in 2026 as monthly auto payments have hit record highs in recent months. That has pushed more Long Islanders to shop with a focus on affordability, said loan specialists, who emphasized that car buyers should educate themselves before heading to a dealership.
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“Monthly payments on vehicle loans are probably the highest I’ve seen, and I’ve been doing this for 20 years now,” said Timothy Aaraas, vice president of retail lending at Island Federal Credit Union based in Hauppauge. Some, he said, are "like a mortgage payment.”
A little more than 20% of buyers financing new vehicles in the last fiscal quarter of 2025 committed to payments of $1,000 or more per month, according to a January report from Edmunds, an online resource for car shoppers. At 6.3%, buyers committing to upward of $1,000 per month for used cars hit a record high as well.
The total shelled out on average for new vehicles also has hit an all-time high, with customers financing $43,759 and paying $772 per month on average, according to Edmunds. Average annual interest rates during the same period were 6.7%, and 20.8% of new vehicle purchases were tied to 84-month or longer loans.
An Edmunds analyst said these trends highlighted how challenging the past year has been for car shoppers.
“Entering 2026, many of the affordability pressures that defined 2025 are still in place, including elevated new-vehicle prices and ongoing economic uncertainty,” said Ivan Drury, Edmunds’ director of insights, in a news release.
But, he added, there are positive signs for change as new vehicle prices stabilize and lower interest rates offer some relief, along with “an increase in off-lease returns” that should provide “more affordable alternatives in the used market.”
In New York, while dealers are seeing healthier inventory than a year ago, prices remain elevated, said Dana Bress, president of the New York Independent Auto Dealers Association.
“Wholesale acquisition costs have never returned to pre-pandemic levels,” said Bress, who owns Galaxy Auto Place in upstate West Seneca. “My gut is, vehicle prices have stabilized at a higher baseline."
For car buyers, the chief concern has shifted in the past year from just finding a car to finding ways to make their payments work, she said.
Here are five tips from experts on how to save money when shopping for a new car.
Shoppers should boost their credit score and arrive at dealerships with a pre-approval in hand, experts said.
“We always suggest that before a borrower applies for a loan, they take some steps to make a difference in their credit score,” like paying down credit card balances; keeping up with debt payments; and avoiding too many credit inquiries, Aaraas said.
Anyone looking to save on an auto loan should "work with a lender that’s going to focus on their financial well-being,” he said, such as a credit union, which usually offers lower interest rates.
Shoppers should also avoid leading the negotiating with payment, said Michael Savino, chief lending officer at Municipal Credit Union.
“A lot of people want to go in with, ‘This is as much as I want to pay.’ But when you lead with payment, you don’t really uncover the true cost of the vehicle and your interest rates and terms,” he said.
People should aim to understand the full cost of the vehicle, including total price of the car, terms, interest rates and insurance, he said. “Think of long-term affordability. Don’t put yourself in a position where you’re sacrificing basic necessities for an auto purchase.”
A September AAA analysis found the total cost to own and operate a new vehicle in the United States is $964.78 per month, or $11,577 for the year.
Paying a higher down payment will reduce monthly payments and interest fees, Aaraas said, warning that shoppers should be cautious of add-ons like extended warranties and protection plans that can increase the loan amount.
Another tactic to save money is to shop near the end of the month or the year, when some dealers might be trying to meet sales goals, he said.
Long Islanders planning a trade-in should investigate what their car is worth to see if the money can go into a down payment on their new car. They should also consider buying gap insurance to cover the remaining loan balance if the car is totaled or stolen, said Vittorio Scafidi, vice president of lending at Jovia Financial Credit Union based in Westbury.
Families are keeping vehicles for longer and more people are choosing to buy out leases, he said, as more drivers find themselves with cars that have negative equity — another factor contributing to higher monthly payments.
At 28.1%, underwater trade-ins are at a four-year high, according to an October Edmunds report, with nearly one in three of those car owners owing between $5,000 and $10,000 on their old vehicles, often from trading out too quickly or carrying loans from cars purchased at record high prices during the pandemic.
Vehicle owners locked into a high interest rate should look into whether refinancing could lower their monthly payments, Scafidi said.
Refinancing involves looking for a program or credit union that can reduce the interest rate on a loan by transferring the lien of the existing lender to a new lender, Savino said.
Brianne Ledda covers personal finance and affordability for Newsday. She previously covered Southold and Greenport for The Suffolk Times and is a graduate of Stony Brook University.
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