There are early signs that the price of new and used cars in the United States is finally stabilizing after a long period of wild increases and fluctuations. We’ll have to wait until 2023 to see how far this effect goes, but we know for a fact that 2022 ended with the highest monthly car payments, according to a new survey from Edmund.
During the last quarter of last year, the country’s average monthly car payment was $717, which was a record high and up $14 compared to the third quarter of 2022. As of Q4 2021, the average monthly car payment was $659. Interestingly, there was a small decrease in the average amount financed compared between Q3 and Q4 of 2022 – $41,347 versus $40,833. This can easily be explained by the higher annual percentage rating, which increased from 5.7 percent to 6.5 percent. By comparison, the APR in Q4 of 2021 was 4.1 percent.
Other interesting finds include in Edmund’ survey is that there is now a larger share of consumers who commit to paying a monthly payment of $1,000 or more – 15.7 percent, to be precise, compared to 10.5 percent in Q4 2021 and just 6.7 percent in the last quarter 2020. There is a similar trend in the used car market where now 5.4 percent of consumers opt for a monthly payment of $1,000 in the fourth quarter of 2022 versus just 1.5 percent in 2020.
As the monthly payments go up, so do the down payments. On average, Edmunds said, consumers paid $6,780 as a down payment on a new car in the last quarter of last year compared to $5,291 in Q4 last year. Advances in the used car market averaged $3,291 versus $3,552 a year ago.
The increased annual percentage ratings, in turn, lead to fewer consumers choosing to rent rather than buy outright. Edmund’ data shows that penetration of new vehicle leases will drop to only 16 percent in 2022 compared to 29 percent three years ago. In the luxury segment, that percentage dropped from 53 percent in 2019 to 26 percent last year.