Chattanooga Buyers Torn Over Car Loans as Prices Hit $49K and Rates Rise to 9%

A gleaming new vehicle may appear impressive in your driveway, but with costs approaching $50,000 and interest rates around nine percent, the true financial impact might be felt well after you take it home.

We interviewed a new car owner from Chattanooga who mentioned that it's not about appearance, but about being able to afford it and feel at ease with the payment over many years.

Mason Shank recently purchased a vehicle...

Always examine the figures before being deceived by the appeal of the latest innovations.

He mentions that the most significant aspect for him wasn't the features.

Interest rates were on everyone's thoughts, as ultimately, it's quite costly these days.

At this moment, the figures are significant.

In a new report by Kelley Blue Book,The typical new car sold for approximately $49,000 in January.

In the meantime, typical auto loan interest rates are approximately nine percent.

What does this imply for your finances?

We consulted UTC economist Howard Wall.

Many individuals purchase a vehicle through financing, with average interest rates around 9%, which is significantly higher than before the pandemic.

We did the calculations, and at current rates, financing a typical new vehicle over six years might result in monthly payments of approximately $900.

That's over $10,000 in interest once it's fully repaid.

A few years back, when interest rates were lower, the same loan would have been thousands cheaper.

"You observe it with home mortgages, credit cards, and all other forms of borrowing, and this is due to a significant period of inflation," Wall states.

That combination of increased prices and higher interest rates is affecting younger buyers particularly severely,as stated by the Bank of America Institute.

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New statistics indicate that from 2019 onward, payments on car loans for younger millennials have increased by almost 60 percent.

Shank claims that pressure is genuine.

It's highly competitive and also quite aggressive.

For purchasers such as Shank, this implies avoiding new cars completely.

I recently purchased a 2013 Honda Civic. I suggest buying a pre-owned one.

Wall states in a market such as this, the essential factor is straightforward...

Don't take on too much debt, as interest rates are currently high. Also, keep in mind that getting a six-year car loan might not be wise, since your vehicle, if you're working within a budget, probably won't last that long.

As per the Bank of America Institute, affordability issues have also impacted the electric vehicle sector, with hybrid vehicles currently outpacing the demand for electric vehicles.

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