Want a Car Payment? On Average, you'll Pay $712/mo.
Cars are less affordable thanks to higher costs, few incentives and higher interest rates...
The car market experienced a spike in pricing never seen before. Not only are used cars a thing of expense, but new car payments have also hit an absurd high in May totaling out to an average of $712/mo., according to Moody’s Analytics.
Even as the analytics firm said prices would come down soon, other experts familiar with the car market claim it would take years before supply goes back up for vehicles, and then and only then will the prices come down. Another reason for absurd prices has been the recent spike in interest rates on car loans. Specifically for car loans, the rates have spiked 8bps.
Due to Covid, there has been an evergoing issue of supply chain disruptions and plant closures. This too has played a role in keeping inventories on the hook.
Cars right off the lot are now 26% more expensive than before the pandemic and 19% more expensive than just last year. As everybody wants to make more money, neither the manufacturers nor dealers wish to lower prices anytime soon and we may never see a “normally priced” car in a long time.
Monthly car payments, as referenced, have reached an absolutely absurd high of $712/mo. in May. The report said “the estimated typical monthly payment increased 1.7% to $712,” which is a new record high for monthly payments. Adding to Moody’s findings, Kelley Blue Book found that the average price for a new vehicle in May was sitting around $47,148.
For those living with the median income, it would take 41.3 weeks of that income to buy a new vehicle…
As has been the story for a while, it isn’t just new cars. You don’t have to pull a car fresh off of the lot to burn a hole in your pocket, as it is reported that used car prices were also up 40% over the last year in February and averaged a price of $28,000 to $29,500.