Record Auto Payments Driven by High Prices and Interest Rates
What happened
The average monthly payment for a financed new car reached a record $787 in the third quarter, up from $777 in the second quarter. The average new vehicle sold for $50,562 in September, while nationwide auto loan balances climbed to $1.71 trillion in the second quarter. Analysts attribute these record payments to high vehicle prices and stubbornly elevated interest rates, with the average new-car APR holding at 7%.
From fortune.com
Why it matters
The combination of record vehicle prices and high interest rates is significantly increasing the cost of car ownership for consumers. This trend reflects a market where manufacturers have prioritized high-margin vehicles, resulting in elevated consumer prices.
From fortune.com
Who's involved
- Kelley Blue BookProvides vehicle valuation and automotive research used to track market trends.
- Cox AutomotiveIs the parent company that owns Kelley Blue Book.
- cars.comIs a direct competitor to Kelley Blue Book in the automotive information sector.
- ToyotaIs a multinational automotive manufacturer whose sales are influenced by market perception.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- CarMaxSpeculative
Might see increased demand for used retail options as consumers seek affordability due to high new car prices.
- ExperianSpeculative
May face increased financial risk exposure from lenders due to record auto loan balances.
- General MotorsSpeculative
Could see reduced sales volume and lower consumer purchasing power because of high vehicle prices and interest rates.
Keep exploring
The entities involved
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Kelley Blue Book
an Irvine, California-based vehicle valuation and automotive research company
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Jessica Caldwell
researcher
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