From eggs to beer to broken bike parts, everything seems expensive these days. I can’t go more than a day without scratching my head and thinking, “Is it me, or is everything expensive as shit?”
Looks like I’m not alone.
Rising interest rates and high demand got us here: The average car payment in the U.S. hit $730 this month, while a growing number of Americans (17 percent) are now paying more than $1,000 a month for your vehicle. Car and driver has more detailed information here. That’s a staggering set of numbers, as just a decade ago, these kinds of pay figures were largely unknown in the mainstream market.
According to the c/d Piece, it’s not British supercars, but truck and SUV payments that drive new members to $1000 a month. club, especially in states like Texas and Wyoming, where demand for trucks is high and interest rates are rising above seven percent.
Also, market factors are not helping. Hottest new cars are still in short supply and transaction prices are reaching record highs. Some auto executives expect the national average to reach $50,000 soon. The more wistful among us will remember when $50,000 bought you a very nice BMW 5 Series. Now many vehicles without an imperious German badge on the nose top $50,000 by default.
This moment seems eerily similar to those leading up to the Great Recession of roughly 2007-2009 and the mini-recession that followed four years later. Although in this case, we’re focusing on auto loans, not subprime mortgages. And yet, a pattern exists.
Lending institutions are allowing Americans to take on unprecedented debt to get into new cars, offering seven-year loans to pay off the huge cost, all while the Federal Reserve raises interest rates to curb inflation. There is also a dearth of good used vehicles on the road, which has increased their price significantly. Cars are just plain expensive now, no matter where you look.
If you have something reliable and used, you can hold on to it for now, rather than chaining yourself to a huge monthly payment as economic uncertainty approaches. Working backwards from your needs is always a smart way to shop and has always helped me make smarter car buying decisions. For those in need of a new car, there are plenty of great budget options available well under $40,000. Even sports cars (or practical sports cars).
