Many Americans Now Have A $1000+ Monthly Car Payment

Back in April we reported that record high prices were pushing the average car payment higher than it's ever been. First quarter data compiled by Edmunds showed that the average car payment was $648 a month. That number is even higher as of the third quarter. To bring things up to date, Edmunds data now shows that the average monthly payed stayed above $700 every month in the third quarter.  And you'd better sit down for this one:  Edmunds says a growing share of Americans are now willing to pay monthly car payments topping $1000 a month, as interest rates and prices continue to rise.  Texas is one of the top three states with the highest percentage of new car shoppers paying over $1,000. 

$1,000+ Monthly Car Payments On Rise

As reported in Edmunds' Q3 finance trends release, 14.3% of consumers who financed a new vehicle purchase in Q3 2022 committed to a monthly payment of $1,000 or more — the highest level that Edmunds has on record — compared to 12.2% in Q2 2022 and 8.3% in Q3 2021.  

"Despite worrisome macroeconomic conditions, Americans are spending more money than ever on new vehicle purchases," said Jessica Caldwell, Edmunds' executive director of insights. "Ongoing inventory shortages are partly to blame, but this trend is also a reflection of consumer preferences. In the past decade, we've seen Americans embrace a bigger-is-better mindset by gravitating toward larger vehicles with more creature comforts, technology-heavy features and, more recently, electrified powertrains — but that all comes with added cost. Rising interest rates combined with higher prices has sent monthly payments soaring to new heights."

Here's a closer look at the share of monthly payments over $1,000 for financed new vehicle purchases in Q3 by state, make, model and powertrain. Edmunds' findings, as outlined in a press release, reveal that: 

• More than 1 in 4 consumers who financed an EV committed to a monthly payment over $1,000.
  • 26% of consumers who financed an EV committed to a $1,000+ monthly payment, compared to 24% of consumers who financed a plug-in hybrid, 14% who financed a gas-engine-only vehicle, and 4% who financed a hybrid vehicle. 
• Two mainstream brands known for their popular truck offerings made it to the top 10 list of makes that commanded the greatest share of $1,000+ monthly payments. 
  • Though luxury brands dominate the list, GMC earned a No. 7 spot with 41% of its shopper base committing to a $1,000+ monthly payment and Ram took the No. 10 spot with 36% of its shopper base committing to a $1,000+ monthly payment. The full list of makes ranked by share of $1,000+ monthly payments can be found below. 
• Large trucks and large SUVs dominated the top 10 list of models that commanded the greatest share of $1,000+ monthly payments. 
  • Ford F-150, Ram 1500 and Chevrolet Tahoe captured the highest percentage of monthly payments over $1,000. The Ford F-150 made up 5.6% of all new vehicle loans made in Q3 with a $1,000+ monthly payment. The top 10 list of models ranked by share of $1,000+ monthly payments can be found below. 
• States with consumers that favor large truck purchases are leading the country in the greatest share of $1,000+ monthly car payments (infographic available). 
  • Wyoming, Texas and Utah had the greatest percentage of new-car shoppers who agreed to a monthly payment over $1,000 (25.7%, 20.8% and 19.1%, respectively). 

"A pullback of lease incentives is yet another contributing factor to these rising payments," said Ivan Drury, Edmunds' director of insights. "As leasing grows increasingly more expensive, more affluent consumers are instead opting to finance luxury brands and large vehicles. And with few lease or finance incentives expected from automakers in the coming months, and yet another rate hike by the Fed anticipated in November, we expect that monthly payments topping $1,000 will become even more common."

Here's a look at the share of $1000+ monthly payments by make, a list led by Porsche, Land Rover and Jaguar.

Share of $1,000+ Monthly Payments by Make
(Q3 2022 - Edmunds.com)

When you look at it by model, Ford leads the way.  In fact, the top two models in terms of $1000+ monthly payments are both pickups. Keep in mind too that pickups are the top-selling vehicles in America.

Share of $1,000+ Monthly Payments by Model
(Q3 2022 - Edmunds.com)

For more quarterly finance data visit Edmunds.com

Photo credit: O P Creative/Shutterstock.com.