In the third quarter of 2024, 17.4% of car buyers found themselves committing to monthly payments exceeding $1,000. This is a staggering increase from just 4.3% in 2019. The surge can be attributed to persistently high new car prices and increasing auto loan rates.
According to LendingTree, the average car payment for new vehicles was $734 per month in the second quarter of 2024. This number highlights the significant financial commitment required to purchase a new car today.
The escalating costs are driven by several factors:
- Rising Car Prices and Interest Rates: The average new car price has increased dramatically, while auto loan interest rates continue to climb, making financing more expensive for buyers.
- Negative Equity: Many buyers are trading in vehicles with negative equity, meaning they owe more than their cars are worth. This situation further inflates monthly payments, creating additional financial strain.
For the typical U.S. household living paycheck to paycheck, these high car payments pose a serious challenge. As more individuals struggle to keep up with their financial obligations, we can expect to see a rise in delinquencies and tighter lending conditions on the horizon.
$1K car payments are still rampant:
In Q3, 17.4% of buyers committed to $1,000+ monthly payments — up from 4.3% in 2019.
The reasons? Stubbornly elevated new car prices and auto loan rates.
Bottom line: The typical U.S. household living paycheck to paycheck could have trouble…
— Car Dealership Guy (@GuyDealership) October 22, 2024
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