Anyone strolling through a car dealership surely feels the gut punch today’s prices deliver. While compact and sub-compact vehicles remain fairly affordable, base model small trucks, crossovers and SUVs run about $35,000. If you want upgrades like leather seats, driver assists, or a fancy console, that number gets a little scarier. And if you’re wondering if this increase feels steeper than normal, you’re not crazy. Experts estimate that new car prices have gone up at least 29 percent from this time ten years ago while median household incomes have eeked upward a mere 6 percent. In addition, interest rates have increased alongside prices. These things in combination don’t paint a pretty picture for consumers.
Reasons for the Increase
The biggest cause of this price escalation involves improved technology and standards. There’s no way around it, modern cars are faster, safer, more efficient, quieter, and more computerized than ever.
Another possible source could be the increase in subprime loans (those approved for borrowers with a 620 or below credit score). More specifically, financial gurus claim these loans have increased more than the market can handle, an idea complicated by the Federal Reserve Bank’s assertion that past due and defaulted auto loans are becoming more mainstream. The worst offenders appear to be borrowers under age 30, but anyone aged 30 to 39 comes in a close second.
What It All Means for You
First, when the price of one commodity goes up, consumers look for other options. That said, high quality used cars are dominating the market. On the other hand, while buying used won’t cause you to break into the kids’ college funds, it will cost more than it used to. In fact, used car prices have increased at a dizzying rate of 36 percent over the last decade.
Another takeaway could be to tread cautiously but not in a panic. Unfortunately, the auto industry is looking much like real estate did before the market went downhill years back (banks handing out money too casually = market instability). Being aware of market trends and possible weak spots only serves to strengthen your financial sense. Perhaps the most you can do is buy a quality car that fits your needs, take care of it in accordance with the manufacturer’s guidelines, and drive like your granny sits in the backseat (not only will cautious driving keep you safe, it limits wear and tear on your car’s vital organs).
For all your vehicle’s maintenance and repair needs, call Benton Road Auto & Diesel Repair in Bossier City, LA at 318-239-9626 and schedule an appointment today!