This trend is expected to continue into 2022.
In 2021, the prices of used and new cars in the United States, and around the world, continued to rise. This could be due to a variety of factors, such as supply chain disruptions and chip shortages. As a result, the average monthly payment for new cars is at an all-time high. While there are many other contributing factors, let’s first look at the numbers.
Edmunds data shows that the average monthly payment for a new car in the US was $636 during the last quarter of the year compared to $614 during Q3. This is the highest monthly average payment Edmunds ever recorded and surpasses the record for the third quarter. The average term of financing remained stable at around 70 months.
Why is this happening? While it is obvious that new car prices are rising, Edmunds suggests there may be a more fundamental reason. According to the publication more luxury car owners are choosing to finance their vehicles than lease them. Because of the low interest rates and reduced lease incentives, this trend is expected to continue. Buyers also spend more upfront than ever before.
These numbers are a bit out of context. Edmunds states that the average monthly car payment in the United States for Q4 2020 was $581. This was approximately the same as the amount paid in Q4 2019, which is the last pre-coronavirusyear in the automotive industry. In the meantime, down payments increased from $5,394 to $5,780 during Q3 2021 to Q4.
Although luxury car buyers have driven an increase in monthly car payment, there aren’t any major changes in the top-performing models in 2021. The Lexus RX was America’s most popular premium model with 101,059 delivery last year. This is more than seven times the number of Ford F-Series cars that were crowned America’s best-selling. The situation was almost identical for the second-hand market.