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New car affordability has dropped 13.3% from August 2019 to August 2022; used car affordability has dropped 26.7% based on iSeeCars Car Affordability Index
Used cars which had been affordable in 2019 but aren’t in 2022 include several popular models such as the Honda Accord, Honda CR-V, Subaru Forester, Toyota Camry, and many others
New cars that were affordable in 2019 but aren't in 2022 include the Nissan Frontier, Chrysler 300, Jeep Cherokee, and Kia Sorento
Car prices have increased as a result of changes in consumer behavior, supply chain issues, and other effects of the pandemic; however, household incomes and wage growth have not kept pace. According to the latest iSeeCars.com analysis, these price increases have resulted in drops in car affordability: new car affordability has dropped 13.3% from August 2019 to August 2022, while used car affordability has dropped 26.7% over the same period. This has priced many popular models out of reach for the average consumer, forcing buyers to use longer loan terms with less money down, or simply choose an older, less desirable vehicle.
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Was at the dealer for service they tempted me to trade in my car for a new one on the showroom floor. Loans can now go to 96 months. This is getting out of hand.
It really is a shame at how many people don't realize how to save money and not follow the game that the titans of industry play; even more so is the shame that we really don't have much power in shaping the industries because the consumer is not rational and does not have a clear view as to that is going on. Typically people are convinced they need a vehicle, some think they must have a brand new vehicle, and most don't understand the project expenses related to owning/leasing a vehicle. They think they can afford it as long as they can pay the monthly payments. That assumes they factor in the cost of insurance, financing, fuel, repairs/maintenance, and depreciation/residual value. If one fails to acknowledge any one of those factors they will find vehicle ownership to be more expensive each month than they planned.
I recall the average length car loan was 2 years back in the early 1990s, which was reasonable considering interest rates were higher and vehicles on average had shorter longevity. 3-5 year loans seem to the norm day and I cringe at the thought of a 10 year loan that is being proposed...on a generally depreciating asset...that most people don't plan on owning beyond 5 years. it's complete value destruction for the consumer and they have no idea what's happening.
I miss the old days when an economy car was the norm or when you could buy a cheap pickup truck about the same price as a mid-size sedan. Instead, manufacturers are peddling out $60K-$100K trucks with heated leather seats and all the bells and whistles that jack up the price (and profit margin). Then you have the regulatory bodies that demand $10K worth of airbags, tire pressure monitoring system, ultrasonic parking sensors, and backup cameras that pretty much total a car should they be in a minor-moderate accident. I miss the old days when bumpers didn't have painted plastic covers that cost $3K to replace and respray. In short, owning a vehicle now is so expensive...meanwhile banks, auto manufacturers, dealership networks, insurance companies, and parts manufacturers (often subsidiaries of the auto manufacturers) are making money at our expense.
Was at the dealer for service they tempted me to trade in my car for a new one on the showroom floor. Loans can now go to 96 months. This is getting out of hand.
I get at least one email/regular mail from my dealer wanting me to trade my car in for a new one for "only $20K". I don't want a new one - they cost a lot more than I paid for mine less than 2 years ago, plus virtually all the safety and whiz-bang features aren't available. I'm almost afraid to take it in for service lest they steal it.
New car affordability has dropped 13.3% from August 2019 to August 2022; used car affordability has dropped 26.7% based on iSeeCars Car Affordability Index
Used cars which had been affordable in 2019 but aren’t in 2022 include several popular models such as the Honda Accord, Honda CR-V, Subaru Forester, Toyota Camry, and many others
New cars that were affordable in 2019 but aren't in 2022 include the Nissan Frontier, Chrysler 300, Jeep Cherokee, and Kia Sorento
Car prices have increased as a result of changes in consumer behavior, supply chain issues, and other effects of the pandemic; however, household incomes and wage growth have not kept pace. According to the latest iSeeCars.com analysis, these price increases have resulted in drops in car affordability: new car affordability has dropped 13.3% from August 2019 to August 2022, while used car affordability has dropped 26.7% over the same period. This has priced many popular models out of reach for the average consumer, forcing buyers to use longer loan terms with less money down, or simply choose an older, less desirable vehicle.
But you don't save any money, hardly, by buying an older vehicle, because the used car market is over-inflated. A good used Toyota costs the same as a new one did 2 years ago. Even the ones with over 100K miles on them cost close to the price of a new Yaris the last time those rolled off the assembly line, so why not buy a new compact?
I have a 7 year old Jeep, and although it doesn't have a lot of miles on it, it has been driven through 6 winters, with the salted roads that come with it. Several months ago, I was considering buying a new one, to "get current", and have something that will last longer into the potential ICE vehicle ban.
I then considered what the supply chain issues have done to the car business, combined with the current effects of "Bidenflation", both to pricing of new vehicles, as well as the state of my 401K, and I said "screw it"......
We have heard as well that most dealers will only have a few models on the lot and you have to order one. My niece waited 4-5 months for a new Rav4. We will just keep our 7 year old Civic as it has less than 60,000 miles and going strong.
We have heard as well that most dealers will only have a few models on the lot and you have to order one. My niece waited 4-5 months for a new Rav4. We will just keep our 7 year old Civic as it has less than 60,000 miles and going strong.
Understand what you're saying, but as I mentioned in another discussion, I'm used to "ordering" my vehicles, so waiting the 4-6 weeks, at least in the past, isn't a big deal for me. Today, it's a case of not wanting to spend $45-50K at the moment.
Once the banks can no longer hold onto too many repo'ed cars then the floodgate will open up. The main problem the last few years isn't just inflation. The banks have been aggressively using low interest rates to hold on to repo cars and not letting them flood the market. With players such as Carvana and Carmax just buying up whatever is released to the market from auctions, local used markets, they controlled the used car supply keeping the prices high.
But recently Carmax has took on too many car purchases and not selling them as fast, they just reported a quarterly loss.
So they will have to taper down their used car purchases and that means more glut on the market and prices will drop really fast and the banks will have to accelerate their repo car auctions.
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