The U.S. economy is becoming “K-shaped” as wealthier Americans see a rise in wealth from home values and stock market returns. Lower- and middle-income households are struggling with higher inflation, leading to longer car loans due to record-high average car prices of $50,080 in September (1,2).

The average car loan length is now 69 months, with 22% of loans extending to 84 months, costing buyers more in the long run. Wealthier households are driving the auto market, while price-conscious buyers are staying in the used-car market, according to Cox Automotive (3). The old “20/4/10” rule for buying a car no longer applies, with a 60-month loan becoming the new standard (4).

Longer loan terms can lead to more interest paid over time, creating a cycle of debt. To save money, consider making biweekly payments, rounding up payments, or paying off windfalls towards the loan balance. Refinancing for a shorter term can also save on interest charges (5).

Buyers are delaying purchases in hopes of lower prices and interest rates in the future. If already in a long loan term, consider refinancing for better rates or following a debt repayment strategy like the avalanche method to save money on interest payments (3). Reworking your budget to find extra money for loan payments will provide peace of mind for future finances.

Read more at Yahoo Finance: Car prices are at a record high and many are taking on big loans for a set of wheels. Here’s how to pay off yours faster