Why are car prices so high?

Why are new cars getting expensive in the U.S.? And what is this leading to? The higher prices of cars means more Americans are getting themselves into more debt

A new report by Experian says new vehicle loans have reached a new high, standing at $40,290 dollars.

That means on average- payment to that loan would be more than $650 dollars a month.

That is 15% higher from the same period last year.

Another indication of these high loans is that- it now takes an average of almost 70 months to pay off the entirety of these loans.

But it’s not only new car buyers who are in debt.

Used car buyers are also taking out loans, and the average loan for them increased by nearly 19% to $28,534 dollars.

That means paying around $515 dollars a month.

The federal Reserve has been raising interest rates to lower inflation- but according to Reuters “prices of new vehicles in the United States have been rising faster than the overall inflation rate.

Further adding, that Automakers say they still cannot keep pace with demand because of shortages of semiconductors and other supply chain problems.

A separate report from J.D. Power observes that the average price of a new car hit a record high of $46,259.

And more data from Experian demonstrates an increased number of Americans are looking to buy second hand vehicles due to the high prices, with more than 60 percent of buyers getting a loan for a used car.

With supply chain problems and a post-pandemic recovery period, there are others too around the world complaining of high car prices.

But only time will show whether getting a new car will become harder or easier.