Why Car Payments Are So High Right Now

Car payments have skyrocketed in recent years - a result of high interest rates and high prices. Pandemic era shortages are partly to blame. But larger structural factors are, too. For years customers have been clamoring for fancier cars, and automakers have raked in the profits. In the short term, rising incentives and falling prices may provide some relief. But insiders wonder what the car market will look like over the next decade.

Chapters:
00:00 - 01:14 Title card - Why car payments are so high right now
01:23 Chapter 1 - Rising car payments
02:04 Chapter 2 - Why so high?
05:35 Chapter 3 - Good news

Producer: Robert Ferris
Editor: Darren Geeter
Animation: Jason Reginato
Senior Managing Producer: Tala Hadavi
Additional footage: Getty Images, Hyundai, Toyota, GM, Ford

About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

Connect with CNBC News Online

#CNBC

Why Car Payments Are So High Right Now

[DevoutSkeptic]

Never been happier not having a car payment.

[_santos]

I’m sorry but $30k for a Corolla should be a felony…

[colestaples]

It’s called greed from manufacturers and stupidity from consumers

[NYCGemini]

paid my car off earlier this year and it’s working perfectly fine and has 70, 000 miles on it. not buying another car until this car runs to the ground

[Rtruo]

Why are they so high? Because Americans keep telling themselves they need that 85k GMC Denali 2500 to live. 96mo payments at 8%? Yes. People do it to themselves.

[justinfitzsimmons]

What is even funnier is that the car dealers are adding mark ups on cars that should be only 19, 000 to 23, 000 at the regular price and putting 10, 000 to 20k on some car models because they are greedy and want to make commission.
this needs to be regulated and punished to stop the car dealers from making buying a new car a luxury.

[FXRunner]

I'm still driving a 2007 Honda fit. That little car is a gold mine of reliability, low maintenance, high gas mileage and tens of thousands of dollars saved by not having to buy a new car 😆

[KiamKweli]

The irony. Younger generations are driving less than previous generations. They'd rather Uber and Lyft everywhere or take public transportation. Congrats auto industry, you played yourselves.

[andyroo]

I just mailed in my payoff loan amount for my 2020 Honda Accord. I was fortunate enough to have excellent credit and secured a 1.9% interest rate. With my trade, and $3K cash down, my car payment was still $600.00 per month. That kind of car payment chokes you. Some months were really tough with mortgage, home & auto insurance and basic living expenses. It was tough at times, but I made it through.

[michaelhatfield]

The best car payment is zero. Now I pay myself.

[EdgeXXI]

I drive a 2007 just-a-truck. She has no screens, no wifi, but she has a new engine, transmission, and best of all, she's all mine.

[NoamPitlick-bgkw]

Bought my 19 Cruze new, payments were $342 a month, paid it off in late 22. The folks with no car payments definitely have a happier life.

[ljacobs]

Americans continue to buy big, high tech expensive cars and then complain about the payments. Silly.

[Kryptic]

America's obsession with overpriced trucks and SUV's is absurd.

[myveronicajones]

Can we talk about the cost of car insurance next?

[rebeltheharem]

Buying a 50K car with features you don't even need, at an interest rate you can't afford... yeah, it will seem like it.

[gabo]

Another big challenge is how expensive it is to repair cars. You can’t just replace a part, you need someone to use a computer to program that part. People are opting to just buying a new car every 5-6 years because they can’t deal with the high repair costs

[mattpi]

Still driving my paid off 2006 Lexus GS430. Just hit 200, 000 miles. Cant believe the engine is still super quiet at idle and car still runs great! Quality is better and more reliable than these new cars they are making.

[sldj]

NOOOO WAY! I’ll walk or bike before I pay over $500.00 monthly for a car payment.

[davidburrow]

It really bothers me that car manufacturers have completely abandoned the entry-level market. You used to be able to get a base model small car at a reasonable price. Now everything is oversized and full of bells and whistles. Of course those things cost a fortune.