Monthly car payments hit a new record high in May, averaging $712, according to a new report from Cox Automotive & Moody’s Analytics.
The figure marks a 1.7 percent increase and represents a declining trend in new car affordability, the report notes.
New car affordability is significantly down from this time last year. In May, the average number of weeks of income needed for someone to purchase a new car was 19 percent higher than it was in May of 2021 — 41.3 weeks in May 2022, compared to 40.8 weeks in April 2022.
Brian Moody, executive editor for Kelley Blue Book, told ABC News that new car buyers “are going to be paying more” than the manufacturer’s suggested retail price right now because of an unequal supply and demand ratio.
Interest rates and vehicle prices are also increasing at a rate that outpaces income growth, notes the Cox and Moody’s report.
New car payments are increasing as gas prices across the nation are also hitting record highs, due in part to Russia’s invasion into Ukraine.
Last week, the national average for gas prices climbed to $5.01, almost $2 per gallon more than this time last year, according to AAA.
In an effort to combat inflation, the Federal Reserve on Wednesday raised the country’s interest rate by three-quarters of a percent, the largest one-time increase since 1994.