NEW YORK–The accelerating costs related to car ownership are taking a toll on Americans—and can be seen in rising delinquencies, according to a new report.
Many of the costs related to car ownership continued to outpace the consumer-price index last month, and car insurance premiums rose 20.6% in January from a year earlier, noted the Wall Street Journal.
A trip to the mechanic, the price of a parking space, and highway tolls are also up, offsetting the savings from one of the big exceptions, falling gas prices, the report added, noting transportation is Americans’ second-biggest expense, after housing.
‘Feeling the Strain’
“Already, more Americans are feeling the strain. In the fourth quarter of last year, 7.7% of auto loans transitioned to delinquency on an annualized basis, according to the New York Fed—the highest rate in 13 years,” the Journal reported.
According to figures from AAA quoted by the Journal, the total annual cost of owning a new car, including expenses such as gas and insurance, climbed to $12,182 in 2023, up from $10,728 in 2022.
Role of Higher Rates
“A big part of that increase is due to higher interest rates, which raise the cost of borrowing money to buy a car,” the Journal said. “The price of a new car itself rose a mellow 0.7% year-over-year, according to Labor Department data. But that was from an already high base. The average transaction price on a new vehicle rose from $39,813 in January 2021 to $47,358 last month.”
The report went on to note higher car prices are one of the factors pushing up car insurance premiums. As CUToday.info has reported, premiums are also rising because of all the new technology now in cars, which is expensive to replace.
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