At just 18 years old, Will Whitney is proud to be buying new wheels this year. Even with the rising prices of new and used cars, Whitney says he followed one main piece of advice.
“Don’t rush, make sure you have the right down payment,” Whitney said.
But most Americans aren’t taking the swing like Whitney, opting to stick with their current cars instead of buying new ones.
New data from S&P Global Mobility shows that the average age of passenger cars is 12.5 years, an all-time high.
It is the sixth year in a row that the average age of vehicles has increased, mainly because the pandemic reduced the supply and demand for new cars. In addition, rising inflation has kept interest rates high and buyers away.
According to Experian data, rates range from 5% to 20% depending on credit scores and whether the car is new or used.
This means new cars could be a better return.
SEE MORE: Experts: Falling prices make now a good time to buy a used car
“People looking at used vehicles may start looking at new just because with interest rates higher on used and lower on new payments, they start to be a little more feasible with something new,” he said. said Chris Zieber, Bob’s car salesman. Look at Ford in Missouri.
These high interest rates have pushed average monthly payments on new cars to around $700 or more. Typical monthly payments for used cars are around $500.
For Americans making less than the national median income of $71,000, it’s a price they probably can’t afford.
Economists usually recommend spending no more than 10% a month on car payments. People are also taking longer to pay off their cars in an effort to lower payments. Edmunds found that nearly a third of loans take more than six years to pay off.
Right now, fixing cars is usually more profitable than buying new ones. That’s good news for the repair market, which topped $356 billion by 2022 and S&P expects revenue to grow another 5% this year.
They also predict that new vehicle sales will rise to $14.5 billion by 2023. But even as inflation slows, experts don’t expect new vehicles to reach pre-pandemic prices anytime soon.
However, there is one factor that works in favor of consumers. Generally in the industry, vehicles are built to last much longer, with experts citing fuel injection, synthetic oils and more rust-free parts.
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