With incentive spending sitting at near-record lows and average new-vehicle transaction prices climbing rapidly, it’s no surprise that most American motorists are seeing a sharp rise in their monthly new car payment, too.
According to Cox Automotive, the average monthly payment for a new car reached a record $733 in July, up 0.9 percent from June and up a significant 15 percent from the same time period last year. The average price paid for a new car last month, across both mass-market and luxury vehicles, stood at $48,182, up 0.3 percent from June. The average interest rate is also climbing consistently, rising 19 basis points in July, causing new vehicle affordability to decline even further.
A study conducted by Edmunds indicates that 12.7 percent of car buyers who financed a new vehicle purchase in June 2022 committed to a steep monthly payment of $1,000 or more, which is the highest level that the research firm has on record. The average amount financed for new vehicles also hit a near-record level in the second fiscal quarter of this year, climbing from $39,726 in Q1 to $40,602 in Q2.
Rising vehicle prices are forcing many consumers into long-term financing contracts, as well, a practice that Ivan Drury, Edmunds’ senior manager of insights, cautions consumers against.
“A single percentage point increase might not seem like much at first blush, but that adds up to hundreds, if not thousands, of dollars over the course of a 72-month (or longer) loan – a significant cost considering consumers are financing as much as ever,” he said. “The best moves shoppers can make are staying as informed as possible and not relying on car financing strategies of old – because buying a car in 2022 is a whole different ball game.”
GM has seen its average transaction prices rise across all four of its brands, with Chevy and GMC seeing steep increases thanks to strong demand for well-equipped versions of full-size truck and SUV models. The coming introduction of more high-priced GM electric vehicles like the GMC Hummer EV SUV and Chevy Silverado EV RST First Edition will also likely contribute to high ATPs for GM brands going forward.
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Comments
“Average” so many here are paying over 1000/ a month. How will that go when those 3000 ford workers who got laid off this week, and those from the other 90% of companies are planning layoffs??? Bank repossessions will be hard pressed to resell these for the amounts owed as the nation is pinching Pennies due to inflation.
FYI, GM, time to produce cheaper cars pronto!!!! And to slow down your EV plans, cause if you go bankrupt like in 08, EV plans won’t be delayed, they’ll be outright canceled.
We’re going to see dramatic sales again, but the best thing would be to see cheaper hybrids so fuel can be saved.
I meant cheaper in general, they need to crank out equinoxes, trailblazers, an WT trim trucks. In 2008 Honda and Toyota survived off the the Corolla and civic. It’s more than gas prices. It’s down payment, interest rate, insurance and taxes. Right now people are getting approved for big loans, but what happens as those approvals don’t come through?
This is a good thing, For those of us who have the cash, but are just waiting for the bubble to pop. 1st or 2nd Quarter 2023 will be a big wake up call for these people with $750.00 Plus payments. Their loss will be my joy.
Buyers have “no shortage of cash to spend”?
Average payments being that high contradict that pretty well.
The average person being approved well beyond their means is the problem.
We have a 22 ZR2 and a 20 Fusion and the combined payment for both isn’t 733/month.
$733 is insane. I wish people knew that when they damage their finances, they aren’t just hurting themselves but also their community and the nation.
The way the loans were handed out to everyone with a pulse, this will be the auto industry’s version of the subprime mortgage crisis. I’ll be sitting over here with actual cash in hand waiting for prices to plummet on used cars.
I too am waiting on the sidelines with cash, but am more interested to see what happens with new vehicle incentives and prices. There is no way I’m touching a used COVID vehicle that was:
a) shoddily built to begin with using whatever supply chain parts could be plugged-in to move the metal;
b) probably not maintained by the owner (if they can’t afford payments, they can’t afford maintenance); and,
c) “build shy” = “do not buy” in my book
When I can see and touch the vehicle I want at the dealer again, and it’s marked down to move inventory, then I’ll know it’s time to consider a replacement vehicle.
I predict a lot of burning cars for insurance claim attempts, just like 2008 (especially in Europe).
One has yet to ask about the cost of maintenance on these money pits we love to own. But hey, if $700/$750 a month is cool…so is a $200 oil change and car wash. Hey, thanks for the free corn chips in the waiting room…what’s that? Oh, I’m being charged for that too? Nevermind.
I have the cash. GM doesn’t have the vehicle I want!
agreed, give me a 2 door pickup that is above the WT trim. Not everyone needs 4 doors. Mary seems to think we do.
“Many new car buyers have no shortage of cash to spend.”
More like, “many new car buyers are in debt up to their eyeballs.”
It ain’t going to be pretty when people really start feeling the squeeze in the coming months.
The supply chain constraints caused by covid along with increased demand coming out of covid are keeping inventory low and prices high. Basic economics.