by Chris Black
>Financing a new or used car is more expensive than ever, new research shows.
>Amid rising interest rates and elevated auto prices, the share of new car buyers with a monthly payment of more than $1,000 jumped to a record high, according to Edmunds.
>The average price paid for a new car in December set a record of $46,382, according to a separate estimate from J.D. Power and LMC Automotive. While there are signs the market is cooling, sticker prices are up 2.5% from a year ago.
Is it better to lease these days?
Car makers and dealers target the financially illiterate. These buyers will never recover.
"For the first time, over 15% of buyers who financed a new car in 4th quarter of 2022 have a monthly payment of $1,000 or more, compared with 10.5% one year ago." t.co/wNHOrW0xSy— Kent Lucas (@1klucas) January 5, 2023
This is called price anchoring and it’s a marketing technique.
The sign of the apocalypse was last month, when lending partners started to inform us they’re waiving the “no preexisting car loan” requirement.
Generally you don’t finance someone who already has an open car loan, which is logical because the risk of default increases by 100% for a guy with two car payments rather than one.
But now they’re waiving that and financing cars to people who are HUGE default risks, because they know the customer is going to default on the OTHER guy’s loan.
Nobody I’ve talked to has ever seen lenders starting to stab each other in the back before, and they’re all doing it now. And the end result is going to be a wave of defaults meaning a tsunami of repo’d low-mile cars hitting the market just as the job losses start, meaning dealers will be taking pretty much any price to move them.
Apocalypse.