Average car payment hits record $712/month as new and used car prices continue to climb

The average car is becoming less affordable for the average person, with typical monthly payments reaching unprecedented heights.

According to a report from Cox Automotive and Moody’s Analytics, new vehicle affordability continued to rise in May for the fourth consecutive month, with monthly car payments averaging $712 per month.

“Unfortunately, for the segment of the population that probably needs it the most, it’s becoming increasingly out of reach,” said Ivan Drury, senior information manager at car-buying expert Edmunds, says NPR the difficulty of buying a car.

Data from the May Consumer Price Index showed that over the past 12 months, prices for new cars rose 12.6%. This and rising interest rates have meant monthly payments are higher than ever.

Used cars increased again with an increase of 16.1%.

USED ​​CAR PRICES CONTINUE TO RISE AS GASOLINE PRICES AND SUPPLY CHAIN ​​DELAYS INCREASE DEMAND

According to Kelly Blue Book, the average purchase price of a new car in May was $47,148.

“I joke with people that every new car purchase is a luxury car purchase, I don’t care what you buy,” Drury told NPR.

LOW-INCOME BUYERS ARE KEEPED OUT OF THE NEW VEHICLE MARKET

The Cox and Moody’s report says May saw a median of 41.3 weeks of income needed to buy an average new car.

One of the main causes of the price increase is the continued shortage of computer chips that perform many major functions in modern vehicles. According to Cox Automotive’s Rebecca Rydzewski, things may not get worse anytime soon, but there’s no sign of it getting better anytime soon.

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“Prices for new and used vehicles are showing signs of stabilizing, and price growth will likely ease over the summer as the anniversary of the ‘great squeeze’ in inventory passes,” Rydzewski said in a statement. press release attached to a Cox report in June. “However, no one should expect price drops as tight supply in the new market will keep prices high through 2023.”


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Elaine R. Knight