![]() Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. Your CNN account Log in to your CNN account “You’ve effectively lost about 10% of the previous buying pool because they’ve been priced out of the market,” Smoke said. By the end of 2022, subprime loans shrank to roughly 5% of auto loans, according to Cox Automotive data. Subprime loans, which are offered to consumers with lower credit scores, represented roughly 15% of the market in March 2020. The median household income would take 43 weeks to pay off the average new vehicle, according to Cox Automotive’s vehicle affordability index as of February. However, most of that sales growth has been from higher-income households, Smoke said. ![]() New vehicle sales in the first quarter of 2023 grew 5.7% over the first quarter of 2022, according to data from Cox Automotive. “The pressure is most extreme on the lower credit consumers, because not only are they dealing with the interest rate move and inflation and vehicle prices, but they may also pay a premium because their credit is not as good,” Smoke said.ĭespite these challenges, the latest sales data shows the market is continuing to recover from the post-pandemic supply chain crisis. By contrast, a buyer who takes only a two and a half to three year loan could pay a small fraction of that. For instance, a buyer who takes a 70 month loan for a $28,700 used car at the current average loan rate could pay 38% more just in interest. While buyers who opt for longer loans are paying less money up front, interest rates catch up over time.
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