The Affordability Crisis: Are Americans Buying 'Too Much Car' with Expensive Options like Touch Screens?

If you haven't been car shopping in a while, be prepared to be surprised by the prices.

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Vehicle prices have reached an unprecedented level, and the interest rate to finance a purchase has also increased significantly. According to Edmunds, 15% of new car buyers who financed a new car in the last quarter agreed to a monthly payment of over $1,000.

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Ivan Drury, Edmunds' director of insights, warned that a high purchase price for a car can cause financial issues in the future. Paying more for a car now can lead to being "underwater" on the loan when the car's value decreases, he said.

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Recent increases in interest rates have made it more expensive to finance a car. If you're looking for a vehicle that will last, there are certain models that have a greater potential lifespan. Unfortunately, it can be difficult to find good deals on cars these days.

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Drury advises potential car buyers to consider if they are purchasing a vehicle that is too extravagant for their needs.
A contributing factor to the issue is that many Americans are opting for pricier SUVs and pickups with all the bells and whistles, which can be up to 40% more expensive than the base model. In the past ten years, luxury buyers have consistently demonstrated their eagerness to invest in expensive vehicles and the financing that comes with them.

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Drury noted that even the most minor improvements have been met with great enthusiasm, citing the Honda Odyssey's built-in vacuum feature as an example when it was first released in 2014.

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Different packages are available to suit the needs of different customers. These packages may include enhanced safety features, larger engines, and luxurious finishes like leather seating and a superior sound system. People are increasingly desiring the latest technology in their vehicles, such as touch screens, ambient lighting, 360-degree cameras, and heated and cooled seats, according to Drury. This, however, comes at a higher cost. He noted that fewer and fewer people are interested in a basic car.

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Due to the high demand for luxury vehicles, car manufacturers are improving their selection of cars and reducing the production of more affordable models. According to Drury, base models are often not available in practice. He went on to say that buying a new car is a luxurious experience.

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He posed the question of who should be held accountable for the current situation: the consumer who is purchasing these options, the dealers who are ordering these cars, or the automakers who are producing fewer base models?
Due to the increasing cost of new cars, automakers may explore cheaper options; however, if there is a high demand for these models, the price could rise.

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According to Drury, the most effective way to obtain a basic model vehicle is to purchase it directly from a dealership.
He suggested that there may be an alternative that is just as good but at a lower price.