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New vehicles are becoming more affordable as vehicle loan interest rates decline

Auto loan interest rates fell to 10.47% in March. (iStock)

Thanks to lower interest rates on auto loans, drivers are feeling some leniency in new car prices. Cox Automotive/Moody’s Analytics Vehicle Price Index is shown.

The average interest rate on new cars in March fell to 10.47%, the lowest level since September. That said, consumers should not get too excited as the low prices may not last long.

“The first significant decline in interest rates in two years has been a positive driver,” said Jonathan Smoak, chief economist at Cox Automotive. “However, given the rise in interest rates so far in April, that decline is likely to be short-lived.”

The average payment for a new car fell slightly by 1.2%, helping buyers find more room in their budgets. This added space is why more drivers are buying cars now.new car sales increased by more than 5% From January to March.

As prices have fallen, so have the number of weeks of income needed to make a purchase. According to a report from Cox Automotive, buyers spent 36.9 weeks of income when purchasing an average-priced new car, down from 37.5 weeks in February.

Reduce other car-related costs, such as car insurance, by comparing price quotes frequently. Don’t overpay for car insurance. With Credible, you can compare interest rates and lenders with the click of a button.

Americans’ biggest goals are to buy a new car and save for an emergency: Learn

The moment when electric cars come into play

Consumer trends and the desire for a more sustainable future are driving the popularity of electric vehicles in the United States, Europe, and China.

Approximately 14 million new electric vehicles will be registered in 2023. The International Energy Agency reported. Currently, there are 40 million electric cars on the road worldwide, 95% of which are in China, Europe and the United States alone. In 2023, the United States will account for 1.4 million of the 40 million electric cars, an increase of more than 40% compared to 2022.

The surge in electric vehicle purchases is primarily driven by a $7,500 tax credit that buyers can secure for certain EVs, as well as a growing awareness of how gasoline-powered vehicles are impacting the planet. Masu.

Gone are the days of expensive Teslas and Toyota Priuses. More and more manufacturers are producing electric cars, making them more accessible to the average driver. The number of electric car models increased by 15% in 2023. Today, there are approximately 590 different EV models.

However, some EV models are losing favor among drivers. Tesla’s sales plummeted The company laid off 10% of its employees World wide.

If you buy an EV, make sure you have the right insurance. Before purchasing insurance, it is important to compare several car insurance companies and their coverage. Credible’s auto insurance marketplace simplifies this process.

Purchases of new cars are increasing, but insurance is also being affected.

Car insurance prices are rising and drivers are getting quotes more frequently

While prices for some vehicles have fallen, auto insurance premiums haven’t followed suit. Interest rates are the opposite, soaring more than 22% in the past year. According to the Bureau of Labor Statistics.

States across the country are struggling to keep up with these high interest rates. Insurance premiums in California and Illinois have become so high that insurance companies are leaving the state altogether. In some places, that rate has essentially doubled in recent years as climate change and high accident rates take hold.

Rising rates have caused drivers to seek new coverage more frequently. The number of drivers who received quotes from other insurance companies increased by 13.5% in March. JD Power reports. This continues the consistent increase in interest rate shopping that was also seen in January and February.

The increase in rate shopping was driven by higher rates, with the percentage of shoppers who said their rates were too high increasing from 16.9% in March to 21.3%. The number of drivers who faced a rate increase regardless of their insurance claim also nearly doubled, from 7.9% to 14.6%, adding fuel to the rate-shopping fire.

Comparing multiple insurance quotes can save you hundreds of dollars a year. Visit Credible today to compare quotes for free.

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Have a finance-related question but don’t know who to ask? Email it to your trusted money expert. Moneyexpert@credible.com Your questions may be answered in Credible’s Money Expert column.

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