Average New Car Payment Hits Record $45,844, Driven by Supply Chain Snarls - PYMNTS.com

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The average payment for buying a new car is up — it’s expected to hit $45,844, an all time high, CNBC wrote Tuesday (July 5).

This comes as a result of problems such as limited inventory, a shortage of computer chips, and other supply chain issues.

Data from the U.S. Bureau of Labor Statistics said new car prices shot up 12.6% from a year ago. And used cars are 16.1% higher.

In addition, financing vehicles is also going to get pricier — the Fed’s latest interest rate hike, 0.75 percentage points, has made auto loans more expensive as well.

The report notes that the average annual percentage rate on a new car was now at 5% for the first time since early 2020. The jump from 4% before might not seem like a lot, though CNBC notes that this could cost consumers $1,324 more in interest over a $40,000, 72-month car loan.

“Low-interest rates used to be one of few reprieves for car shoppers amid elevated prices and supply shortages,” said Jessica Caldwell, executive director of insights at Edmunds. “But the Fed rate hikes this year are making finance incentives far costlier for automakers, and consumers are starting to feel the pinch.”

That said, luxury shoppers have not slowed down buying cars. While consumers with more modest incomes might have to back off, over 12% of consumers who financed a car in June have committed to $1,000 or more in monthly payments.

PYMNTS wrote recently that debt of various kinds will be becoming more expensive due to the Fed’s boosts to interest rates, an effort to fight rising inflation.

See also: Auto Lenders Brace for Higher Interest Rates, Recession

Auto lending will feel a pinch, too, as the big banks will be reporting earnings — so their auto lending operations will be bared.

For example, JPMorgan Chase said its auto loan and lease originations were at $8.4 billion in the first quarter, down from $11.2 billion last year.

And CarMax has said its net loans in this period were down from $2.48 billion to $2.44 billion now.

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NEW PYMNTS DATA: HOW UTILITIES AND CONSUMER FINANCE COMPANIES CAN ENHANCE THE BILL PAYMENTS EXPERIENCE

About: More than half of utilities and consumer finance companies have the capability to process all monthly bill payments digitally. The kicker? Just 12% of them do. The Digital Payments Edge, a PYMNTS and ACI Worldwide collaboration, surveyed 207 billing and collections professionals at these companies to learn why going totally digital remains elusive.

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