$29,011: That’s now the average used car price in the U.S., according to Edmunds.com. That’s up 42 percent from a year earlier. It also means that for the first time, more than half of all American households have less income than is considered necessary to buy the average-priced used car.
The general consensus for how much you should spend on a car is no more than 20 percent of their take-home pay. The median household income in the U.S. in 2020 was $67,521, according to the census. What that means is that average American should spend no more than $13,500 on a vehicle. The latest average used car price more than doubles that.
Although the rate of increase may be slowing, you shouldn’t expect to see these prices ease anytime soon. Inflation isn’t helping at all, up 6.8 percent in the past 12 months, and the biggest factor – apart from energy – was used vehicles.
On the new car side, according to Edmunds, prices are around $46,000. And the AP reports that the prices of used cars are likely to grow even closer to new ones. Right now, the 42 percent year-over-year increase for used cars is more than double the increase of new ones. Last month, the average used car price was 63 percent of the average new car price. Compare that to before the pandemic, and it was at 54 percent.
Given all this, it’s no surprise that monthly payments are also up in a big way. They were at $413 two years ago, $382 five years ago, and just $365 a decade ago. However, in November the average payment for a used car was over $500 according to Edmunds. That’s about the average for a new car five years ago.