Car Loan Monthly Payments Top $700 in July

For the first time ever, monthly car payments exceeded $700 in July.

Dealers are offering fewer and smaller discounts on vehicles these days as prices continue to rise and interest rates on loans are steadily climbing, said Thomas King of J.D. Power in a report in TheStreet on Wednesday (July 27). King is the president of the data and analytics division at the Michigan-based data analytics firm.

“The average monthly finance payment in July is on pace to hit a record high of $708, up $81 from July 2021,” he said.

The record-high monthly payments come from consumers seeking larger vehicles and longer loans, said Greg McBride, chief financial analyst for financial data firm Bankrate.

“Limited supply on dealer lots has driven up sticker prices and loan amounts to levels previously unseen,” McBride noted.

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

Earlier this month, PYMNTS reported the average monthly payment for new luxury cars has increased, with over 12% of consumers financing a car paying more than a $1,000 each month. The number represents a 7.3% higher payment from June 2021.

The increase hasn’t tamed the appetite of luxury car shoppers. But it won’t be doable for everyone, with Jessica Caldwell, executive director of insights at car shopping guide Edmunds, noting that many consumers will find new cars out of their financial reach.

Earlier this month, CNBC reported that the average annual percentage rate is now at 5% for a new car loan for the first time since early 2020. 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, while used cars are 16.1% more expensive.