Why Are Cars So Expensive?
If you’ve dared try to purchase a new automobile in the last few years, you probably understand the term sticker shock. With base-model trucks and small SUVs starting around $35,000, you might be hoping the investment comes with a year’s supply of free sandwiches. Or at least a good massage. Unfortunately, the price of cars has steadily increased over the last decade, and not by meager increments. In fact, new cars can cost up to 29 percent more than they did in 2009, but median household incomes have only risen a measly 6 percent. To add salt to the wound, interest rates have also increased (from 5 percent to average of 6.2 percent).
Possible Causes of Price Increases
The most apparent reason for the uptick in pricing lies in current technology and improved safety standards. Today’s vehicles are safer, faster, quieter, more efficient, and loaded with gadgets.
Some experts also blame the increase on subprime auto loans, those given to borrowers with credit scores of 620 or below. Over the last several years, banks have given out more of these loans than ever before, and easy money never comes cheap. To complicate the issue, the Federal Reserve Bank claims to have more past due and defaulted loans with borrowers under the age of 30 (in a close second – 30 to 39-year-olds).
What All This Means
When new car prices go up, consumers look to used options. On the up side, plenty of high-quality used vehicles are on the market today, and they won’t come with the same mind-blowing financial commitment. On the down side, their price increase follows the same steep pattern as buying new (a 36 percent increase from ten years ago…yikes).
Like the real-estate fiasco of the not-so-distant past, consumers should stay abreast of industry conditions, since the housing market imploded after banks started handing out loans to everyone at their door. This doesn’t mean you should panic, only that it never hurts to be choosy with your investments and make sure you’re prepared for the worst. Find a quality vehicle that fits your lifestyle, take care of it like a madman (regular maintenance is everything), and drive it like you have a toddler in the backseat. Cautious driving not only helps you stay safe but it minimizes wear and tear on your car’s many moving parts.
For all your vehicle’s maintenance and repair needs, remember to call Carfix in Mast Dr Garner, NC at 919-900-6505 today!