$730 a month for a car? That’s what the typical loan payment is now.
Amid a tricky economic downturn, Americans are finding it harder to buy new cars, according to new data from Cox Automotive and Moody’s Analytics.
The price paid for new vehicles rose 1.6% in June, while interest rates on auto loans have risen in recent months, pushing the estimated typical monthly payment to a record high of $730.
Those looking to buy a new car would need to spend an average of 42.2 weeks of earnings to buy one, the report notes – up 17% from June 2021.
Jonathan Smoke, chief economist at Cox Automotive, noted in a statement that the majority of new-vehicle buyers have high incomes, undeterred by the effects of sky-high inflation and interest rates. “With this group, vehicle availability and low inventory is a bigger barrier than vehicle prices,” he said.
Still, typically, most car buyers borrow at least a portion of the purchase price. And national data shows that few cars have been spared from rising costs.
Inflation is at 9.1%, its highest level in four decades, and used cars and trucks are 7.1% more expensive today than they were a year ago, according to the Bureau of Labor Statistics. This is on top of prices that had soared rapidly in the early months of the pandemic. Even last fall, the going rate for used vehicles rose more than 40%, with the average listing price just over $30,000, according to online platform CarGurus.