Higher interest rates make it more expensive to finance a vehicle purchase through an auto loan, which in theory should take some prospective buyers out of the new car market, lowering demand and easing some of the upward pressure on prices. More than 14% of Americans who financed a new vehicle in the third quarter of 2022 committed to monthly payments of $1,000 or more, an increase from just above 8% a year earlier, according to Edmunds.įederal Reserve officials have expressed hope that car price growth will slow down following recent interest rate hikes and as vehicle inventory improves. For the sake of comparison, in October 2021, the average new car payment was $680.Ī large portion of car buyers are making monthly payments that are far higher than the average. ![]() Monthly payments on new cars averaged $743 in August, so just a few dollars less than the new high reached in October. ![]() That's slightly lower than the record high of $48,301 in August, but new car prices are $1,775 higher than they were a year ago. The average transaction price for new vehicles increased by $187 from September to October, rising to $48,281, the vehicle valuation company reports. ![]() But when you factor in higher interest rates today, it’s never been a more expensive time to purchase a car, according to a report Wednesday from Kelley Blue Book (KBB). In October, new vehicle transaction prices were actually just below a record high set in August. The average monthly payment for Americans buying new cars climbed to $748 in October, an all-time high.
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