The cost of financing a new vehicle remains at an all-time high, according to the car shopping experts at Edmunds.
The new report shows new car purchases are becoming more out of reach for people. Average monthly payments have reached an all-time high of over $700 and more people than ever have car payments of $1,000+.
News4JAX spoke with a woman at Hyundai of Orange Park who just purchased a brand-new car. She said taking advantage of a Fourth of July special was the only way she was able to afford a new Genesis and when she first started shopping, she was shocked by the prices.
Elevated interest rates continue to drive up costs, leading some consumers to take on $1000+ monthly payments.
The average annual percentage rate (APR) ticked up a tenth of a percentage point to 7.1% in Q2, compared to 7.0% in Q1 and 5.0% in Q2 2022. 7.1% is the highest APR since Q4 2007.
“The double whammy of relentlessly high vehicle pricing and daunting borrowing costs is presenting significant challenges for shoppers in today’s car market,” said Ivan Drury, Edmunds’ Director of Insights. “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.”
Shirley Simmons bought a brand-new Genesis GV70 Wednesday in Jacksonville, but the car buying process didn’t come without sticker shock.
“I really thought I could get into a new vehicle in the 40-to-$50,000 range,” Simmons said. “That was a shock from a couple of years ago where you could still go through in the 40s. That’s not the case anymore.”
Simmons’ job requires her to buy a new car every five years because she’s constantly on the road racking up thousands of miles. She said the price didn’t use to be this high.
New data from Edmunds backs up Simmons’ experience. Five years ago, the average new car was about $36,000 ($35,794) – today the average price is almost $48,000 ($47,713) which is a 33% increase.
Jack Hanania Jr., Vice President of the Hanania Auto Group, says not to expect prices to come down anytime soon. The good news is there are more new cars on the lot as supply chain issues ease up – giving buyers more negotiating power.
“The prices have been a little bit higher than traditionally, however, the trade-in value has been higher, too. So, it kind of comes out to an even — an even, you know, gap, if you will,” Hanania said.
High interest rates are also making things more expensive – in June, the average was almost 8% in Florida. But taking advantage of a Fourth of July special got Simmons a 3.5% interest rate on her new car – Hanania recommends car buyers do their research and ask about incentives to get a better price.
“Go out, look at, you know, different banks look at the different programs because there are some really good programs with the different manufacturers and different interest rates that you can qualify for in today’s market,” Hanania said.
The good news is that used car prices are coming down but analysts at Edmunds expect demand for used cars to rise as people look for more affordable options this car buying season.
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