Buying a New Car? Monthly Car Payments Will Be About $691 Based on March Interest Rates
New car buyers are in for more than the usual sticker shock this year as a confluence of events ranging from ongoing supply-chain disruptions to rising interest rates have pushed monthly auto payments so high that many Americans have been priced out of the market.
Based on March prices and interest rates, the monthly payment for an average new vehicle is now about $691, the Associated Press reported. That figure is steep enough that households with a median gross income of less than $66,000 probably can’t even afford it, according to calculations by Cox Automotive and Moody’s.
One reason prices are so high is that millions of Americans are competing to buy a shrinking supply of both new and used vehicles — especially smaller, cheaper models that consume less fuel. This is partly the result of a production slowdown caused by shipping delays of key auto parts as well as a global microchip shortage.
But while high prices and rising interest rates might be scaring off many middle-income earners, wealthier consumers aren’t shying away at all, experts say.
Among all purchases of new autos last month, nearly 79% were for larger, more expensive vehicles such as trucks and SUVs, the AP noted. That’s up from 52% a decade ago. Meanwhile, as of December 2022, the average price of a new car had risen by more than 22% since the beginning of the COVID-19 pandemic.
“I can’t imagine a situation in which we’ve had so many people willing to spend so much money,” Ivan Drury, a senior manager at Edmunds.com, told the AP. “It’s just abnormal for someone to go out and spend (sticker price) or above. I can’t think of any other time period unless it was on specific models. And this is every car on the road.”
Even moderately priced used vehicles have become a lot more expensive lately. The average price of a two- to eight-year-old compact car rose 1.1% at auction during the past three weeks to an average of $12,560. Over the course of a year, that translates into a price hike of nearly 20%. Prices of older cars have risen even higher, according to data from Black Book. Auctions are where many dealers purchase their vehicles.
The good news is, prices of some vehicles have been easing in recent months. The bad news? Prices of other consumer items continue to push higher, leaving Americans with less cash to spend on cars.
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