If you will soon be purchasing a new car, you should be aware that you could be looking at higher costs. In fact, CNBC is warning that car buyers should expect to face sticker shock when they next visit an auto dealer.
News about rising car prices is bad for consumers, many of whom already struggle with car payments that are too high and many of whom continually have car loans throughout their lifetimes. Unfortunately, in some cases, car buyers end up spending a fortune on vehicles that turn out to have major defects and they end up paying loans on a car they can't even drive. In these circumstances, a California car lemon law attorney should be consulted for help as soon as possible to explore available legal remedies.
Even if everything goes right with the car, however, higher payments and costlier new cars could still put many consumers in a tight spot.
New Car Buyers Likely to Face Higher Price Tags
CNBC reports that data from Edmunds shows costs are going up across the board for car shoppers. Consumers are looking at higher prices for their cars, as well as rising interest rates for auto loans that add to the expense as well. Many car shoppers end up having to take longer loan terms so payments stay affordable despite the big price tag and high interest rate, which means that these car buyers pay more in interest over time since it takes them so long to repay the loan.
Average prices for a new car hit $34,623 in March of 2018, up substantially from an average new car price of $31,078 just five years ago. Interest rates on new cars also reached 5.7 percent, compared with an interest rate of just 4.4 percent in March of 2013. Rising prices and rising interest rates have helped to contribute to car buyers borrowing more and for longer. For example, car buyers borrowed an average of $31,020 in 2015 compared with borrowing an average of just $26,553 only five years ago.
Borrowers who may not be able to make big monthly payments have ended up making loan terms longer. While the average car loan length was around 65.7 months in 2013, now car buyers are taking loans out for an average of 69.5 months. Since buyers are stretching out the time to repay, the entire car ends up costing more because borrowers end up paying more in interest for longer time periods. After factoring in monthly payments and interest, a typical car buyer ended up spending around $36,494 on average in March of 2018 compared with $29,905 on average in March of 2013.
While consumers are helping to drive up average prices by choosing bigger and costlier vehicles such as SUVs, other factors are also impacting the total car costs as well, such as rising interest rates, which are beyond the control of consumers. To keep costs affordable, buyers should consider all options including some lower priced options.
Whatever car you buy, it's also important to know your rights if problems arise. A California car lemon law attorney can help you if the vehicle you purchase turns out to have serious problems so contact an attorney for advice if you need it.