Car payment interest rates are forcing many people to put more miles on their used cars

June 7, 2024 11:17 am
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With car prices skyrocketing, how are car owners offsetting the costs?

 

PONTOTOC, Miss. – The average car payment is at an all-time high in 2024. More Americans are choosing to hold onto their cars instead of getting a new one.

Salvage yards and used auto parts stores are seeing more first time customers.

“Our industry is really fortunate that when the economy is good… kind of like with the rising tides raise all boats… We kind of see that,” Keith said. “And then when the economy’s bad, people turn to us that maybe never have thought about used car parts.”

Some drivers are paying $700 or more a month for a new car. Used car payments are around $500 a month. Many people are deciding to fix up their cars and put more miles on them to avoid breaking the bank.

“A lot of young kids are burdened with a lot of car debt, because they got excited, got credit and could afford a car. Now, the car payment and the insurance is kicking their hind end,” Chris Keith of Kars used auto parts said.

The average interest rate for a new car loan right now is about 6.3%, which is about four percent since 2021. The average APR for a used vehicle is a staggering 11.9%.

Mechanics are seeing more people come into the shop instead of hitting the car lots.

“With the cost of everything going up it’s become more reasonable to repair the cars than it has been to just run out and buy another one and get a car payment,” Chris Ruth of Ruth’s Auto Repair said.

Kars Used Car Parts

 

Used parts at a Pontotoc salvage yard, Kars.

 


 

 

Kars Used Auto Parts has nearly a thousand vehicles in its inventory. The owners say each one is like its own warehouse. Chris Ruth’s Auto Repair Shop is less than a mile away. Ruth said he is a frequent customer.

“It helps a lot. It saves a lot of money getting used parts instead of new. Some of those new parts have gotten outrageously high,” Chris Ruth said.

Chris Keith told WTVA he is seeing more customers wanting to sell their cars to help with payments on another vehicle. The business is doing so well they are hiring. He said applicants are welcome to walk in with their resumes.

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