In August, consumers spent more money on buying new cars, and insuring them due to high inflation, according to recent reports.
The average price for a new vehicle in the U.S. in August went to $48,301, beating the previous high of $48,080 that was set in July. In addition to that, consumers paid more for their cars, financing them became more expensive as well. Interest rates on auto loans increased by 37 basis points from July to August, according to the Vehicle Affordability Index.
The index said that driving costs are up due to high inflation and supply chain issues.
In August, insurance costs went up by 1.3%, according to the latest CPI And US households are spending an extra 5% more on buying and insuring cars than last year, according to a recent doxoINSIGHTS report.
In August, the new-vehicle affordability was much worse than a year ago when prices were lower, incentives were higher and rates were much lower, according to the Cox Automotive Moody's Analytics report. The median income needed to purchase the average new vehicle in August was up 14% from last year. If you want to lower your auto insurance costs, you may consider switching your insurance provider. The average U.S. household is spending almost $200 a month on auto insurance, up from $186 a month last year, according to doxoINSIGHTS.
Inflation has caused loss costs for insurers to go up, which is a reason why consumers are paying more for insurance. Insurers are paying more for auto repairs and replacements and passing those expenses onto consumers because of increased vehicle costs.
Jim Kreyenhagen, a vice president of marketing and consumer services at doxo, said that the last few years have created a perfect storm to increase the cost of car ownership in the category. The cost of buying a car and buying gas went up as the accidents and insurance rates associated with it went back to pre-pandemic rates. If you are looking for ways to lower your auto insurance premiums, you may consider switching your provider. Credible allows you to compare multiple insurance companies at once and choose the best coverage option for you.
There are signs that inflation is improving in the used vehicle market. Cox Automotive's Manheim Used Vehicle Value Index, which measures the prices that dealerships pay for used cars at auctions, fell 2.3% in the first half of September from August.
The average list price of used vehicles fell to $31,302 in July, a 4.6% decrease in value, or $1,526 less than the average list price in January, according to Edmunds.
Jessica Caldwell, Edmunds' executive director of insights, said that these price drops are not earth-shattering but they should be a welcome reprieve for consumers compared to the higher cost of new car purchases or leases.
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