Shoppers Are Shelling Out Big For New Cars
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How could this possibly go wrong?
Not too long ago, we covered how the average monthly car payment in the United States has reached an all-time of $712 per Moody’s Analytics. With the supply crunch and few new cars available, it seems many are desperate enough to pay large piles of cash for the privilege of owning a new car. Now, Edmunds has found a record portion of the market is paying $1,000 a month or more.
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That data gathered by Edmunds shows that out of vehicles purchased in June, a whopping 12.7% come with a payment of $1,000 or more each month. That’s the highest percentage Edmunds has ever recorded for the $1,000-plus a month segment of the market. Helping drive that figure up is the fact the average annual percentage rate for new vehicles jumped to 5%, a number we haven’t seen since Q1 of 2020.
According to Edmunds, this increase is being driven in part by luxury vehicle shoppers choosing to buy instead of lease. This could be driven by concern about the constrained supply. Back in June of 2019 new-vehicle leases for luxury models was a whopping 30.5%. That number plummeted to just 18.5% for June of 2022.
Like we keep seeing in other surveys, Edmunds found the average amount financed for new vehicles was sky-high. It reached $40,602 for Q2 of this year, almost setting a new record. Yes, new cars have become pricey.
Meanwhile, Kelley Blue Book says the average price of new cars sold in June reached $47,148. Before you think that contradicts the data from Edmunds, this figure is for the total sales price, not the amount financed. Believe it or not, that falls short of the record which was set back in December of last year. If the current situation with shortages continues, that number could be superseded by the end of 2022.
Considering Kelley Blue Book says most people who purchased a new car in June paid over MSRP, there are quite a few would-be shoppers who are most likely sitting things out. As interest rates continue to increase even more will decided to keep their hooptie going instead of getting something new. But there’s plenty of debate if things in the market will even out anytime soon or if this is “the new normal.”
Sources: Edmunds, Kelley Blue Book
Photos via Nissan, Ford, GM
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