Not only are the prices of new and used cars going up, but so are the monthly payments used to finance them, according to a new report from automotive publisher Edmunds.
Those higher monthly payments are the result of a perfect storm of economic conditions. The cost of the vehicle and the interest rate used to formulate the monthly payment continued to move higher over the last few months.
As a result, Edmunds estimates that the average monthly payment for a new car or truck purchased in the first quarter was $648. That compares to $639 in the first quarter last year and $575 in the first quarter of 2020, just before the pandemic hit.
The monthly payment for the average used vehicle isn’t that much lower. Edmunds estimates that the average monthly payment for used vehicles is expected to break a record, climbing to $538. That's up from $432 in the first quarter of 2021.
Edmunds experts say the record monthly payments are the result of record prices for the cars and trucks themselves. They estimate that the average auto loan was $39,340 for a new vehicle and $30,040 for a used car or truck.
Using those calculations, the average new car loan increased by 12.2% year-over-year, and the average used car loan surged 28.6% higher. Edmunds data suggests that luxury new vehicle lease penetration fell to 32% in March 2022, down from 53% in March 2019.
Inventory is still a problem
The researchers say lower inventories are a massive problem for buyers who are looking for a good deal on a vehicle.
"Shrunken inventory continues to wreak havoc on both the new and used vehicle markets, and shoppers who can actually get their hands on a vehicle are committing to never-before-seen average payments and loan terms," said Jessica Caldwell, Edmunds' executive director of insights.
Edmunds also estimates that the average new car buyer made a down payment of $6,026 in the last quarter, a 27% increase compared to the same period in 2021. It’s the first time that number has crossed $6,000.
“It’s a tough time to have to buy a car,” said Karl Brauer, executive analyst at iSeeCars.com, in a recent ConsumerAffairs interview. “I’m telling people that if they can wait to replace their car, they should.”