At just 18 years old Will Whitney is proud of buying himself new wheels this year. Even with new and used auto prices on the rise, Whitney says he followed one main piece of advice.
"Don't rush it, make sure you got the good down payment," Whitney said.
But a majority of Americans aren't taking the swing like Whitney, choosing to stick with their current cars instead of buying new ones.
New data from S&P Global Mobility shows the average age of passenger cars is 12-and-a-half years — a record high.
It’s the 6th straight year the average vehicle age has increased — largely because the pandemic cut both supply and demand for new cars. Plus, rising inflation has kept interest rates high and buyers away.
According to data from Experian, rates hover around 5% to over 20% depending on credit scores and whether the car is new or used.
That means new cars could be a better bang for your buck.
"Folks that look at pre-owned vehicles may actually start looking at new just because with interest rates being higher on used and lower on new payment start being a little more feasible on something brand new," said Chris Zieber, a car salesman at Bob Sight Ford in Missouri.
Those high interest rates have pushed average monthly payments for new cars to around $700 or more. Typical monthly payments for used cars are in the $500 range.
For Americans making less than the national median income of $71,000 — it's a price they likely can’t afford.
Economists typically recommend spending no more than 10% a month on car payments. People are also taking longer to pay off their cars in an effort to keep payments down. Edmunds found nearly a third of loans take more than six years to pay off.
Right now, fixing cars is typically more cost-effective than buying new ones. It’s good news for the repair market, which topped $356 billion in 2022 and S&P expects revenue to grow another 5% this year.
They also predict new vehicle sales will rise hitting $14.5 million sales in 2023. But even as inflation slows, experts don’t expect new vehicles to hit pre-pandemic-level prices anytime soon.
There is one factor working in consumers’ favor though. Overall in the industry, vehicles are now built to last much longer, with experts citing fuel injection, synthetic oils and more rust-free parts.
Trending stories at Scrippsnews.com