According to a report by Edmunds, the average annual percentage interest rate for loans on new cars in the third quarter of 2022 was 5.7%, which was the highest rate since 2019 and the average loan amount set a record of $41,347. As a result, buyers must make substantial monthly payments, which in the third quarter of this year averaged more than $700. However, a startling statistic shows that 14. 3% of buyers financed their new automobiles with minimum monthly payments of $1,000, compared to an average of only 8. 3% in 2021.
of $1,000 or more in premiums.
The survey discovered “a minor increase in shorter loan periods in the third quarter,” which is why many automakers are now offering cheap interest rates to lure customers.
Because the company “estimated how much additional interest a consumer may anticipate to pay on a $40,000 auto loan for 72 months at 5% per annum vs 36 months at 1.9% per annum, these offers may be the way to acquire cars.
While taking out a short-term loan would result in a monthly payment rise from $644 to $1,144, consumers would save an incredible $5,200 in interest. But not everyone has an extra $500 a month to go toward their automobile payment.
In comparison to 24% for electric hybrid automobiles, 14% for internal combustion engine cars, and 4% for other hybrid models, 26% of electric car buyers in the third quarter of this year pay premiums of more than $1,000 per month.
Premium automakers like Porsche (72%), Land Rover (66%) and Jaguar (51%) had the highest percentage of customers spending more than $1,000 per month.
According to Jessica Caldwell, CEO of Edmunds, “despite worrying macroeconomic conditions, Americans are spending more money on new automobiles than ever, but rising interest rates, inflation, and other factors are creating new frontiers and new methods.”
increasing the $1,000 monthly instalments of debt owed by Americans
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