PHOENIX (AZFamily) —Buying a new vehicle is considered one of the most expensive purchases a consumer will make. And car prices seem to be increasing.
In fact, Edmuds.com released a new report stating that the average car payment right now is $750 a month.
During the past three months, 20 percent of new car owners had signed up for monthly payments of $1,000 or more.
“It’s such a high number for people to comprehend,“ Joseph Yoon told On Your Side.
Yoon, an analyst with Edmunds.com , says $1,000 monthly car payments aren’t for anything fancy or luxurious either.
“These are just kind of larger cars that people are buying and that people need to get to work or, you know, haul their family around. That’s costing them over $1,000 a month,” says Yoon.
To avoid high car payments, he says consumers are financing for longer periods. Edmunds.com discovered that 22% of new car buyers in April, May, and June agreed to 84 monthly payments. That’s 7 years!
Yoon says, “What we’re seeing now is that not only are vehicle prices so high, so is the interest rate. And so when you combine those two there’s no real winning for the consumer trying to buy a new car.”
And says tariffs aren’t to blame. Yoon says the Ford Mustang Mach-E is made in Mexico, and Subaru models are imported from Japan. Those are the only manufacturers who have publicly said their vehicles will be more expensive.
So, if buying a new car seems to be out of reach, you’re not alone.
“So you come in and say, ‘Hey, look, I don’t need anything fancy. I just want the car that I’ve been driving. I just want the newer version.’ However, the price difference for the same car from 7 or 8 years ago today might be $15,000 or $20,000,” Yoon explains. “And so when you tack on a 7% interest rate, you suddenly realize, ‘Oh my God, I can’t afford this car.’”
In addition, the lack of manufacturing incentives is not helping consumers either. Out of all new cars sold since April, less than 1% of those loans had zero percent financing. That’s the lowest in 20 years.