raising interest rates<\/a> for the first time since 2023. The benchmark interest rate will rise to 4.00%, directly increasing car loan costs for new owners and borrowing costs for automakers, potentially raising new-car prices. Again.<\/p>\nOh, and you still can’t afford gas.<\/p>\n
The details aren’t pretty<\/h2>\n
If you’re one of the lucky few who can afford a new car, keep in mind that’s just the beginning: you still have to pay to feed it and finance it.<\/p>\n
Start at the pump. Back in late February, a gallon of regular averaged about $2.88 nationally. Now it’s sitting around $4.44, and it jumped roughly 15 cents in a single week. Painful, sure, but we’ve seen worse. The 2022 peak was just over $5, so gas still has room to climb before it sets a record.<\/p>\n
However, the keyword there was “peak.” This time around, we’re not seeing a single spike and more so a long, torturous nightmare every time we pass a gas station.<\/p>\n
Diesel is a different story. It blew past its old record earlier this month and is now north of $6.39. If you tow with a heavy-duty truck, you feel it every time you fill up. Even if you drive a gas car, you’ll feel it at the grocery store, since diesel moves the vast majority of freight in this country. Fuel can account for a big slice of the cost of getting food to the shelf, and shoppers are already trading down to store brands and skipping snacks.<\/p>\n
Then there’s the loan. The average new-car buyer is financing around $44,000 at a little over 6% APR, with a typical payment of $748 per month. Oh, and remember, one in five are paying over $1,000. I found that out a while ago and was horrified.<\/p>\n
Nearly a quarter of new loans now run 96 months or longer, which is eight years. Think about how much car you’d want to be paying for at year seven.<\/p>\n
The Fed just nudged rates up a quarter point, and one analyst figures that adds about $6 a month to the average payment. That’s small on its own, but it adds to prices that already average over $50,000, and another hike could follow next month.<\/p>\n
Automakers aren’t having a great time either. They borrow heavily, fuel costs are hitting their operations too, and metal tariffs are pushing up the cost of building the cars in the first place. So far, most of them have been swallowing those costs rather than passing them along, but that can’t go on forever.<\/p>\n
What’s the solution? Keep your current car as long as you can. It’s not the most exciting answer (trust me, I feel your pain, I’d love to buy a new or used car every few months), but it’s the one that’s most likely to keep you sane.<\/p>\n
Just keep up the maintenance, rotate the tires, and maybe put a bumper sticker on the back to shake things up. Better than paying $1,000.<\/p>\n","protected":false},"excerpt":{"rendered":"
Car loans are about to get worse. Fewer people have been buying cars in the U.S., and the reason is … <\/p>\n
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