HOUSTON – As gas prices continue to climb, the cost of buying a new vehicle is also reaching record levels, leaving many drivers stunned at what it now takes to get behind the wheel.
Consumer experts say the average price for a new car is now higher than ever, and monthly payments are stretching budgets across the country.
KPRC 2 Investigates reporter Bill Spencer spoke with Houston-area drivers who say the numbers are becoming hard to believe.
Patrick and Rosalind Ceasar recently went looking at new vehicles and were shocked by what they found. Pickup trucks they looked at were priced between $70,000 and $90,000.
“That’s crazy,” one shopper said while looking at a truck on the lot.
Patrick says prices feel completely out of control.
“They’re raking us over the coals, man. They’re raking us over the coals,” he said.
Rosalind says the monthly payments are just as shocking as the sticker price.
“We have a friend who’s paying fourteen hundred dollars a month just for her car note,” she said.
Both say they’re already paying about $750 a month for their current vehicles, far more than they ever expected.
“I recall just a few years ago you were paying four, five hundred for a pickup truck. Now it’s seven. I couldn’t imagine paying seven,” Patrick said.
According to consumer finance site Bankrate, the average price of a new car recently climbed past $50,000 — the highest level on record.
At the same time, loan rates have increased, with the average 60-month car loan now above 7 percent. That combination is pushing monthly payments close to $750 for many buyers.
Ted Rossman, senior industry analyst with Bankrate, says buyers are feeling the squeeze.
“We’re talking about record-high car prices, and that equates to a monthly payment of about $750 a month. This is taking a big bite,” Rossman said.
To make payments more affordable, some buyers are choosing longer loans — sometimes eight to ten years — but that comes with a cost.
“If you have a five-year car loan at 7% on $40,000, you’re paying close to $800 a month. You can bring that down to about $550 if you stretch it to eight years, but it could cost you thousands more in interest,” Rossman explained.
What you can do to save money
Experts say there are ways to avoid paying more than you have to.
First: Keep your current vehicle longer if possible. Driving your car one or two more years could save hundreds of dollars each month, money you could put toward a larger down payment later.
Second: Shop around for financing. Rossman recommends checking at least six credit unions or smaller online banks, which often offer lower loan rates than traditional lenders.
With car prices and interest rates both high, experts say doing your homework before buying could save you thousands of dollars in the long run.