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New-Car Buyers Paying More Than $1,000 A Month Hits Record In Q2 2023

New-car buyers are facing some daunting challenges, including high vehicle pricing and high interest rates, the combination of which is leading to record-breaking financing figures. Now, according to a new report, the number of new-car buyers taking on monthly payments of $1,000 or more reached a new high in the second quarter of 2023.

According to automotive researchers at Edmunds, the share of consumers who financed a vehicle with a monthly payment of $1,000 or more reached 17.1 percent last quarter, an increase of 0.3 percent from 16.8 percent in Q1 of 2023, and a substantial 12.8-percent increase from a figure of 4.3 percent recorded in Q2 of the 2019 calendar year.

The GMC Acadia crossover at a GMC dealer.

Edmunds also indicates that new-car buyers paid an average monthly payment of $722 in Q2 of the 2023 calendar year, a $3 increase compared to an average monthly payment $730 in Q1 of 2023, and a $55 increase compared to an average of $678 recorded for Q2 of 2022.

“The double whammy of relentlessly high vehicle pricing and daunting borrowing costs is presenting significant challenges for shoppers in today’s car market,” said Edmunds’ director of insights, Ivan Drury. “The Federal Reserve’s recent pause in interest rate hikes unfortunately didn’t offer much relief for consumers, and hints at further raises later this year mean auto loan rates could even continue to increase.”

Edmunds also reports that the average APR was up to 7.1 percent in Q2, the highest average APR since 2007. The Q2 2023 figure represented an increase of of a tenth of a percent from an APR of 7.0 percent in Q1, and an increase of 2.1 percent compared to a figure of 5.0 percent recorded for Q2 of 2022. The average amount financed in Q2 of 2023 was above $40,000 for the fifth straight quarter.

The analysis also showed two distinct subgroups among those new-car buyers that signed on to a monthly car payment of $1,000 or more, with 64.5 percent signing for a loan-term loan range between 67 and 84 months, with an average APR between 8.5 percent and 9.6 percent. It’s suggested that this group may be upside down on their loans further down the road. The second group, representing 15.6 percent, signed onto loan term lengths between 31 and 48 months with a 2 percent to 4.8 percent APR, and are likely taking advantage of subsidized finance offers.

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Jonathan is an automotive journalist based out of Southern California. He loves anything and everything on four wheels.

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Comments

  1. Just not sustainable. Income is just not keeping up unless you are UAW.

    Reply
    1. Poor CR.8,
      Let’s not have that sour grapes attitude. I hear Mary is going to give you a raise as soon as you can make straight lines while mowing.

      Reply
  2. To each his own but, would have to be some kind of super car for me to spend a $12,000 a year for a car payment. Not putting anything down on purchase?

    Reply
    1. the new mid engine C8 Corvette, is a super car !!!!

      Reply
  3. Anyone who’s stupid enough to sign up for ANY vehicle with a payment that high, deserves what they get. What’s the saying? A fool and his money……………….

    Anyhow, there’s a way to stop this madness. Just stop buying them. Take that power away from the banks and dealers and manufacturers. If people just stop buying, then it will all come down to reality.

    Reply
  4. I LOVE the smell and feel of a brand new car. It’s truly intoxicating. However, new s-h!t eventually turns into old s-h!t. Within 5 or 6 years, the depreciation, wear & tear, and lack of care and consideration on the part of fellow humanity (I.e.: door dings, etc…) really takes a toll on an everyday driver. Most loans are now 7 or 8 years and maybe even longer. It just doesn’t make sense to buy new anymore. There’s some good deals out there still to be had in the used market, but it does take a little more effort and searching. Until salaries increase and get in balance with cost of living, OR prices start coming down, I can’t see myself getting into a new car anytime soon unless I have the funds to purchase it outright and hold onto it for 15 years

    Reply
  5. That’s insane to put this into perceptive my mortgage payment on a HOUSE is $1300 a month and that will probably hold or go up in value granted the economy is good and it’s taken care of! This almost seems like a repeat of 2009 with high mortgage rates and the housing market went bust… Only this time it’s cars …. I will be honest here I have owned two brand new cars the rest where used guess what I liked the six used cars better then the brand new ones. ” There’s a sucker born ever day”

    Reply
  6. Had two lease return vehicles and many used ones from relatives and friends. All were very good and had for many years. One new car I ordered in early 80s was worst car I ever had. Only kept it for year and a half.

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  7. I understand that inflation is the through the roof, interest rates are through the roof and the economy is teetering on the brink, but in order to purchase a car, you have to sign a contract. Unless somebody threatened you with bodily harm, you didn’t need to sign the contract. This is about personal responsibility. If you do not have a nice bank roll to where you can plop down a nice down payment or even pay cash in full, don’t sign it. I don’t know why some people have to make economics so difficult. If you have $100 in your pocket and spend $101, you are broke. I could explain this to an orangutan.

    For me, I either put down 50% (when interest rates were low and pay it off quick) or I pay cash. Hey, that’s just me. I am in my early 40’s and have been doing this for years. To each their own. Why put yourself in a position to where you’re afraid to walk to the mailbox and see your huge car payment in there? Oy vey.

    Reply
  8. When you have our treasury printing and spending too much $, this is the result. We all see the results in the cost of housing, food and transportation. Wages try to keep up, interest rates rise to control inflation adding to the costs. I guess the Inflation Reduction Act hasn’t worked out too well.

    Reply
  9. I feel blessed to have my 2018 Duramax Silverado paid off only 30k miles retired and wifes car too. But there is no way these prices are sustainable!!! even working 150k a year 1000 a month is INSANE!!! people need to stop paying for this madness.

    Reply
  10. It has now become one of the worst investments a person can make with depreciation of about 20% the first year of ownership..

    Reply
    1. not the Corvette, look it up. 2020 C8’s going for 20grand more than when brand new.

      Reply
  11. That’s crazy. Unfortunately, people are brainwashed into thinking they have to have a new vehicle even though it is one of the worst investments you can make. Too many people will spend too much money on vehicles instead of investing in theirs and their kids futures. I see it every day, nice house, nice cars, nice vacations, and latest toys but no savings. Hope they will enjoy the dog food they will be eating in their final years.

    Reply
  12. Thanks Brandon for the inflation! NOT!

    Reply
  13. And the really sad part is that most of these folks won’t even keep the vehicle after it’s paid off to bank those lower cost miles and the non-payments, they are convinced that they have to replace it with a new one.

    Reply
  14. A few good points were made in these comments that I read I just hope rates will come down probably later then sooner I want to buy a new terrain denali but it’s ridiculous when u look at these payments even though not quite a $1000 monthly but 600-700 a month here in Canada it’s nuts might have to get used but 1 year old terrain Denalis are price still to high makes no sense to buy used the only saving grace is the interest rate at 3.9 on a 60month finance term and I sure don’t have a lump sum to put down it’s just very frustrating!!! Might need to wait it out sure not paying 8-9 % on a used vehicle that ludicrous!!!

    Reply
    1. Do not buy a new Terrain Denali! 2019 was the last good year that it was made. My wife had one and it came with the 2.0L Turbo (exclusive to the Denali) and it was a great SUV. It ranked right up there with her BMW SUV’s. Now, GM has stripped the Denali of the 2.0L and you get the same anemic 1.5L as the lesser models, but you’re still expected to pay Denali prices. It’s a straight punch in the face.

      Reply
      1. Thanks infamous for this info yes I totally agree with your statement the 1.5 is a little small for my liking and specially in Denali trim I would probably purchase a good used 2020 Terrain Denali

        Reply
  15. I think that anyone in the market for a fairly new, good used vehicle in the near future will have plenty of good deals coming their way in the next year or two. $1000 a month is unsustainable (in a shaky economy) & some people will have to start dumping their new cars because they cant afford the payments any longer.

    Reply
    1. I just watched a CNBC newscast concerning the prices of cars – new and used. They claim that now that supply has lessened the gap with demand that prices for both new and used cars will be coming down. The trend has already started, the prices to be steadily going down all the way into the end of 2024. If you spend some time on autotrader you can already see $10k discounts on RAM trucks and $5000 discount on some GM full size trucks. CNBC predicts new car prices will go down 10% and used car prices will go down 30%.

      Reply
      1. I don’t put much stock in anything CNBC says but I do agree that prices are coming down due to economic factors and improving inventories. I will be waiting until next year to purchase to take full advantage.

        Reply

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