New car prices accelerate to all-time high
Buyers aren’t deterred and are stretching their car loan payments out, now closer to six years.
The average price paid on a new vehicle in November was $35,852, a modest increase (2.3%) over last year and a steady gain (12.1%) over the past five years, according to the latest automotive resources data.
Data released by online auto research company Edmunds found a majority of new car sales (57%) represented savvy shoppers taking advantage of deals on outgoing vehicle models. Year-old new car sales have been surging lately, with near-double-digit growth (8%) over the past year and twice that (16%) over five years. Of course, it helps when buying incentives are just under October’s record level at $3,371.
To drive off the lot with their new car, buyers are also handing over near-record deposit sums. The average down payment has bulked up $290 since last year to total $3,906.
The rest of the amount due is being stretched increasingly wider, with the average loan term now pushing close to 70 months for new cars and 67 months for used cars. That’s four months longer than the average car loan in 2012.
Auto loan interest rates are rising too, from an average 4.09% five years ago to 4.81% for new cars in 2017. Despite the extended payback time, higher prices and interest rates have pushed monthly payments up to an average of $524.
Used-car rates have actually dropped over the years, from 7.83% in 2012 to 7.36% last year and back up to 7.66% in 2017. As a result, the average $389 monthly payment for a pre-owned vehicle is only slightly above ($7 more) last year. Payments were about $363 five years ago.
Of course, you can often do better than average, especially by comparing your options for a car loan. Learn all about how to find the best car financing for your budget using our guide to car loans.
Additionally, a new way to buy cars is trending right now. Auto subscriptions that lump your car payment, insurance, service and maintenance into one monthly fee. And further out on the horizon? Self-driving cars could change the landscape of the open road.