The New Reality: A $700 Monthly Car Payment

When average monthly new-car payments surpassed $700 in May and car prices reached record highs, many potential car buyers decided to sit on the sidelines until the market returned to normal.

Six months later, normal looks further away than ever. The Federal Reserve continues to raise the federal funds rate, driving auto loan interest rates to a 20-year high, and the average new-car transaction price remains above $48,000.

According to data company Cox Automotive, the average monthly new-car payment hit another record high of $748 in October. Average used-car payments have surpassed $550, based on a 70-month-term loan and 10% down.

Automotive research firm Edmunds lists October’s average car loan APR as 6.3% for new and 9.6% for used. Ivan Drury, Edmunds senior manager of insights, says slight improvements in car supplies and pricing are being negated by increasing rates.

“Even if you save $500 on a car’s purchase price, it could be obliterated on interest rate if you don’t get…

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This article was written by Shannon Bradley and originally published on www.nerdwallet.com