Auto prices are falling, but owning a car is more expensive than ever
Nevada ranked the second-highest auto insurance rates in the country, according to Insurify.
The cost of new and used vehicles may have fallen from the highs of 2021, but surging insurance premiums and rising financing rates are still making it far more expensive to own a car.
New internal data published by Bank of America on auto loan origination suggests that overall car sales are flattening – likely due to worsening affordability issues.
«One reason for this flattening, we believe, is that the total ‘all in’ cost of ownership – including elevated interest rates, insurance, and maintenance costs – has become more expensive even as auto prices are declining,» Bank of America Institute economists said in an accompanying research note.
Car prices surged in the early days of the pandemic for a number of reasons. The government sent millions of Americans stimulus checks, boosting demand. That coincided with a shift away from public transportation and a supply chain crisis that significantly reduced the availability of key parts needed for new vehicle manufacturing.
INFLATION INCREASES 3.4% IN APRIL AS PRICES REMAIN ELEVATED
«As a result, there was a steep drop in domestic inventories, which resulted in a surge in the sticker price for new vehicles,» the economists said. «And with consumers unable to find or afford a new model, they moved into the used market, steeply increasing prices there, too.»
Used cars are offered for sale at a dealership on July 11, 2023, in Chicago, Illinois. (Scott Olson/Getty Images / Getty Images)
Supply chain disruptions have since cleared up, and vehicle prices have started to cool. Yet auto sales data indicates that vehicle loan originations for both new and used cars and trucks have fallen
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