Shopping for a car is never a fun experience, unless maybe you have a million dollars to spend, especially with all the market weirdness from 2020 to now. Sanity continues to return to the used market but at the same time new car prices keep climbing.
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Consumers have been grappling with ridiculous used car prices for far too long, so the relief that’s come and continues is much appreciated. According to iSeeCars, used vehicles have overall become 5.8% more affordable over the past year.
If only the same thing were true with new cars. Even though many are well out of reach of so many households, somehow prices for new vehicles have continuously increased over the past 11 months, says iSeeCars. When you add in higher interest rates, people are able to afford less than in a long time. In fact, iSeeCars says using its Affordability Index new cars have dropped 6.8% over the past year.
You might have been expecting new and used vehicle prices to come down at the same time, especially with interest rates spiking. After all, most people don’t pay cash for cars, especially ones that are new. Some people are just doing without or buying something slightly used instead.
But others have decided to go for longer loan terms on a new vehicle, a move we caution isn’t financially savvy in the least. After all, the longer you pay on an installment loan, the more you end up paying in interest, so in the end it’s more costly. And when new cars already cost more, you’re just adding to the expense.
When it comes to EVs, things are even more dramatic. According to the iSeeCars data, used electric car prices dropped almost 20% over the last year and 10% for new models. You can blame Tesla and its price slashing strategy for that.
Read the iSeeCars report for yourself here.
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