If you’re feeling the pinch with new car payments, you’re certainly not alone. Economists are worrying that Americans are shelling out to much for their vehicle each month, which could result in a serious financial collapse for the industry.
According to Cox Automotive, a combination of high new car prices and interest rate increases have skyrocketed monthly vehicle payment amounts. The average for 2018 was $533 per month, which is over 10.2 percent of the median household income.
With an increase number of people forking out over $600 per month for a car payment, the average is inflating. With 46 percent of cars sold in 2018 carrying a payment amount of over $500, it’s a real problem. If this trend continues, economists are pointing out that households might be forced to slim down from the average two vehicles to one.
This news should be alarming to automakers and dealerships. If the average household eliminates one car, that in turn would put a tremendous dent in new car sales.
One of the factors being blamed for ballooning payment amounts is the popularity of trucks and SUVs. It’s possible shoppers will start returning to subcompact cars and other affordable options, but at the moment it looks like bigger is better for most Americans, including the monthly payment amount.
Source: Automotive News