Cars are costing more than ever to purchase, finance and own—yet consumers remain unfazed
Despite virtually every aspect of buying and owning a new car, truck, or sport-utility vehicle on the rise, sales remain relatively strong. the estimated average transaction price for a light-duty vehicle in the U.S. now stands at $37,401. That’s an increase of $723 in the past year. Experian data shows the average amount for a new vehicle loan amount was at $32,119 over the second quarter of the year. What’s more, the AAA says finance costs on new car purchases have jumped 24% in 2019.
Consumers are coping with rising prices and financing costs largely by extending their car-loan terms. According to Experian, the average loan term for a new vehicle reached a new high this year at 69.17 months. Unfortunately, the AAA found that, on average, for every 12 months a car loan is extended it will cost an owner nearly $1,000 in additional finance charges.
Depreciation, which represents a vehicle’s ongoing loss in value, now accounts for 36% of ownership costs. That amounts to an average of $3,334 a year, which is up by 1.4% over the last year. The average price of fuel rose by 5% since last year’s report, while license and registration costs went up by an average 1.9%.
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