TEXAS, USA — Texas! You are paying some big car payments these days.
Edmunds reports that just behind Wyoming, Texas in the second quarter of 2023 had the largest percentage in the country of auto buyers who are committing to a loan installment that is more than $1,000 a month! They report 1 out of every 4 Texas shoppers in that time period agreed to that, in large part so they can afford expensive trucks.
It’s also due to hefty interest rates, which the Edmunds analysis says averaged 7.62% for new vehicles and 12.23% for used in Texas.
With interest rates like those, it’s no wonder that the typical down payment has doubled from $4,000 dollars to $8,000, according to Barron’s. If you can increase what you put down, it definitely helps you monthly. They figure that by putting down that additional $4,000 at the beginning instead of financing it, you knock about $60 off your monthly note.
Vehicle prices
Still, though, the actual vehicle price is the biggest driver. Recently, Kelley Blue Book reported the middle of the road price was $47,899 for a new vehicle and $26,717 for a used one, which by the way, had an average of 69,851 miles on the odometer, according to Cox Automotive.
Bottom line: Not everyone is paying a grand every month for a new car. But payments amounts are substantial. Experian shows the average monthly payment in the second quarter of 2023 was $729 for new and $528 for used.
Do you buy now? Do you wait?
Kelley Blue Book notes that the cost of used autos has been revving up a bit recently and it's expected to continue.
Kelly Blue Book adds that new vehicle prices have eased off the gas pedal a little. Will that continue?
That’s harder to predict because of unknown future impacts from the autoworkers strike.
Many industry watchers say the end of the year—particularly December—is historically when we see the best deals as dealers are trying to close the books for the year, meet goals and get rid of any excess inventory.
Lending Tree compiled data from previous years and found auto interest rates are lower in December and manufacturer incentives are higher. And yet, they found that people often do not shop for cars in the final month of the year and that auto loan inquiries usually drop 23% in December below the monthly average.
Who knows if all of that will hold true this year because of lingering pandemic disruptions and the autoworkers strike? But according to several sites, including this one, this one, and this one, automakers are offering deals on select vehicles with specific terms right now, including 0% interest rate offers.
Kelley Blue Book discovered incentives, “Averaged $2,368 in September, the highest point in the last 24 months."
Also, the number of days’ supply for a vehicle matters. The fewer days’ supply, the more demand—and probably the higher the price.