Paying $1,000 Per Month for Your Car? You are Not Alone
It is not only the price of new cars that is on the rise. Car buyers are also increasing the debt they take on in order to finance those purchases.
According to new data compiled by Edmunds, nearly 13% of new car buyers in June financed at upwards of $1,000 a month. That is a new record and nearly three times the number from just two years ago.
“Although there appears to be a steady stream of affluent consumers willing to commit to car payments that look more like mortgage payments, for most consumers the new car market is growing increasingly out of reach,” said Jessica Caldwell, Edmunds’ executive director of insights, in a statement rolling out the new data.
Average new and used car prices have been spiking, thanks to supply chain and other issues that have slowed supply. The average price tag on a new vehicle now reportedly tops $48,000. Used cars are now going for more than $28,000 on average.
Car buyers are also increasingly willing to take on longer-term loans. More than one-third (36%) of buyers opted for loans with 73-to-84-month terms, an uptick from the same month last year.
Ivan Drury, Edmunds’ senior manager of insights, said that is a risky proposition.
“Consumers are exploring every possible avenue to make their next vehicle purchase affordable, and longer loan terms are a good example of that, even if that choice poses risks considering vehicle wear and tear and greater negative equity (the amount by which their loan balance exceeds their vehicles' value) as their vehicle ages," he said.
The average borrower is taking out just over $46,600 to finance the purchase of a new vehicle, also near a new record, according to Edmunds. Those borrowers are paying $672 per month over the course of more than 70 months and at an average 5% interest rate.
Safety Risks for Car Buyers
As car prices soar, auto manufacturers continue to have a hard time ensuring that the vehicles they make are actually safe to drive.
The world’s largest carmakers recall millions of vehicles around the globe every year. They often cite serious defects that increase the risk of accidents and injuries.
Fortunately, car owners and lessors in California do not need to wait for a recall in order to have malfunctioning vehicles fixed. The state’s lemon law requires car manufacturers to perform various repairs on vehicles while they are under warranty. The law also forces those companies to buy back (or replace, in some circumstances) vehicles that they cannot or will not fix.
How Our Lawyers Can Help You
If you have been stuck with a defective or malfunctioning vehicle or are haggling with a car manufacturer over repairs, the California lemon lawyers at Bickel Sannipoli APC can help you fight back.