“2024: How Much Are People Really Paying for Cars?”
Understanding the Rise in Car Costs
If you’ve been car shopping recently or just keeping an eye on the market, you may have noticed that getting behind the wheel is getting pricier. There are several reasons for this, but they all add up to one thing: higher costs for those looking to buy or lease a vehicle – both new and used.
Why Are Car Payments More Expensive Now?
The world of cars has been in a bit of a rollercoaster ride since the COVID-19 pandemic began. Several factors have contributed to increasing car ownership costs:
- Manufacturing Disruptions: The making of cars has faced hiccups with parts shortages and other delays.
- Changing Buying Habits: People’s preferences for cars have shifted, some choosing bigger or more advanced vehicles.
- Personal Finance Instability: With many experiencing job loss or reduced income due to the pandemic, financing a car has become trickier.
- Record High Inflation: Everything is more expensive, including the costs associated with producing and selling cars.
- Rising Auto Loan Interest Rates: If you’re borrowing money to buy a car, you’re likely paying more in interest now than in the recent past.
Just How Much More Are We Talking?
Let’s look at some numbers to paint a clearer picture:
- New Car Payments: The average monthly payment for new cars was at $726 by the third quarter of 2023. That is a bump up by $25 from the same time in 2022.
- New Car Leases: Leasing isn’t immune to the increase either. The average lease payment rose to $597 per month, $26 more than the previous year.
- Used Car Payments: Even pre-owned cars saw a jump, albeit a smaller one, with average payments reaching $533 per month, $4 more than in 2022.
Auto Loan Debt Is on the Rise
In America, the total auto loan debt is huge, sitting at approximately $1.595 trillion. To illustrate this:
- Imagine the debt as a stack of one trillion $1 bills. If you stacked them, they’d reach nearly 68,000 miles high—that’s almost three times the distance around Earth!
- If we highlight the change, there’s been a $71 billion increase in auto loans from one year to the next.
Additionally, more people are struggling to pay off these loans on time. About 2.53% of borrowers are significantly behind on their payments.
What It Means for Future Car Buyers
If you’re in the market for a car, it’s important to budget wisely. Here’s a quick guide to help you navigate the costs:
- Know the Market: Be aware that prices are higher, and budget accordingly.
- Check Loan Rates: Interest rates are up, so shop around for the best loan deals.
- Consider Your Credit Score: A good credit score, which has recently averaged around 719 for new loans, can help you secure better loan conditions.
- Be Mindful of Your Monthly Budget: Be sure that your car payment, whether for a lease or purchase, doesn’t strain your finances.
In Summary
Getting a car has never been more costly, with increases everywhere from the sticker price to loan interest rates. Whether you’re picking out a shiny new model or a reliable used set of wheels, you’ll need to budget carefully and ensure that the pleasure of driving doesn’t become a financial burden. So, do your homework, check those interest rates, and drive into the future with eyes wide open to the costs!
