New Car Payments Exceed $1,000 for 12% of Buyers Amid Supply Chain Snarls

The average monthly payment for new luxury cars is up, with more than 12% of consumers financing a car with over $1,000 in monthly payments — a boost from 7.3% from June of last year, CNBC wrote Tuesday (July 5).

This hasn’t slowed down the appetite for shoppers looking for high-end cars. But it won’t be doable for everyone, with Jessica Caldwell, executive director of insights at car shopping guide Edmunds, saying many consumers will find new cars too expensive.

“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,” Caldwell said, adding that carmakers are cutting back on the lower end of the price range in favor of the more expensive vehicles.

In addition, financing vehicles is also going to get pricier — the Fed’s latest interest rate hike, 0.75 percentage points, has made auto loans more expensive as well.

The average annual percentage rate is now at 5% for a new car loan for the first time since early 2020, CNBC wrote. This is an increase from 4%, and the report noted consumers will now be paying $1,324 more in interest over the period of a $40,000, 72-month car loan.

Data from the U.S. Bureau of Labor Statistics said new car prices shot up 12.6% from a year ago. And used cars are 16.1% higher.

The rising prices stem from a stream of issues like supply chain problems and a shortage of computer chips, CNBC wrote. And affordability could be a problem for some time, with the added burden of high gas prices. The average transaction price for a new car was $45,844 in June, according a forecast from J.D. Power and LMC Automotive.

See also: Auto Lenders Brace for Higher Interest Rates, Recession

PYMNTS wrote recently that auto lending, along with debt of other kinds, will be more expensive due to the Fed’s boosts to interest rates, an effort to fight rising inflation.

This comes as the big banks will be reporting earnings, so their auto lending operations will be bared.

For example, JPMorgan Chase said its auto loan and lease originations were at $8.4 billion in the first quarter, down from $11.2 billion last year.

And CarMax has said its net loans in this period were down from $2.48 billion to $2.44 billion now.