Here's how rising car prices can hurt average Americans

[Yo_Mama_Been_Loggin]

Sure, that new-car smell is great. But is the prospect of owning a new vehicle worth going into debt for years to come?

Over the past few years, car prices have been rapidly increasing. While that can be a good sign for the economy, it means consumers will have a harder time affording new vehicles. And because 64% of U.S. adults drive daily, as prices go up, many who rely on their cars for transportation could be forced to take out long-term auto loans in order to afford one.

Why are car prices going up?

In May of 2019, the average price of a new car purchased in the U.S. climbed to $36,718, with interest rates hovering around 6%, according to automotive information site Edmunds. That's up from $35,742 in 2018, which was already a 2% increase from 2017, according to Kelley Blue Book.

This increase in automobile prices is due to a number of factors, including rising interest rates and higher average transaction prices, Edmunds reports.

In 2018, interest rates began to increase, and by April 2019, the annual percentage rate (APR) on new vehicles averaged around 6.4% — marking a new record since 2009, according to Edmunds. Although interest rates fell to 5.7% as of September, they remain inflated, and the cost of purchasing a new car is "still a lot higher than it was a few years ago."

In September 2014, by comparison, the average APR on a new car was just 4.2%.

Additionally, shifts in consumer preferences and industry trends have led, in part, to higher average transaction prices. That's because there's a trend toward bigger cars, rather than compact ones, with more advanced features. Think built-in navigation, Bluetooth capabilities, high-tech safety features and more, which "certainly helps to move prices upward," Ivan Drury, a senior manager of industry analysis at Edmunds, tells CNBC Make It.

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https://www.msn.com/en-us/money/personalfinance/heres-how-rising-car-prices-can-hurt-average-americans/ar-AAJaayl?li=BBnbfcN

[wasupaloopa]

1. At 73 I am never going to buy another new car. I drive Mustangs. My first one was in 1965.

I graduated in 1964. I had a decent job as a department manager at a grocery store. My dad cosigned on a loan for a 1965 Mustang GT. It cost $2,500.

[dalton99a]

2. Used car prices are also going up

https://www.reuters.com/article/us-autos-usa-used-analysis/rising-old-used-car-prices-help-push-poor-americans-over-the-edge-idUSKBN1WQ1AP

October 11, 2019 / 5:07 AM
Rising old used car prices help push poor Americans over the edge
Nick Carey

FREEPORT, Ill. (Reuters) - For America’s working poor, an often essential ingredient for getting and keeping a job – having a car – has rarely been more costly, and millions of people are finding it impossible to keep up with payments despite prolonged economic growth and low unemployment.

More than 7 million Americans are already 90 or more days behind on their car loans, according to the New York Federal Reserve, and serious delinquency rates among borrowers with the lowest credit scores have by far seen the fastest acceleration.

The seeds of the problem are buried deep in the financial crisis, when in the midst of the worst economic downturn since the Great Depression, automakers slashed production. A decade later, that has made a relative rarity of used 10-year-old vehicles that are typically more affordable for low-wage earners.

According to data provided to Reuters by industry consultant and car shopping website Edmunds, the average price of that vintage of vehicle is $8,657, still nearly 75% higher than in 2010 despite some softening in prices over the last year. The average new car, in contrast, has seen a price rise of 25% in that same time period.

“This is pinching people at the worst point possible,” said Ivan Drury, Edmunds’ senior manager of industry analysis. “If you need basic A to B transportation, you have to get an older car that needs more repairs and has more wear-and-tear issues.”

[mitch96]

3. I haven't bought a new car in 14 years..before that it was 10 years.

I buy well maintained "pre owned" cars. Just a few years old. I let the new car owner take the depreciation hit. I'm selling my 2013 that is well maintained and buying a well maintained low miles 2017. I can't stand the bullshit the dealers are pulling so I just don't deal with them. Yes it takes time but the rewards are great when they come... YMMV, works for me..
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[abqtommy]

4. My son and I bought a used car from a private party one year ago. The price was right and

this is the best vehicle I've ever owned and driven. It's been totally reliable during the past year and I look forward to enjoying our reasonable investment in it for many years.