Michigan drivers face soaring car costs
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Illustration: Sarah Grillo/Axios
Even if you put aside gas prices, car ownership has gotten a lot more expensive in recent years.
Why it matters: Though Detroit and the region have sought to improve public transit options, many people still rely on cars, making rising ownership costs hard to avoid.
- Those steep bills also contribute to the city's 36% transportation insecurity rate — those unable to travel safely and in a timely manner due to the absence of transportation resources like gas money or bus routes.
By the numbers: The average monthly payment for a new car in Michigan is now $744, according to new data from car research site Edmunds.
- For a used car, it's $481.
Zoom in: Poor road quality and a higher-than-average crash rate in Metro Detroit also weigh on drivers and increase costs, per the Detroit News.
The big picture: The higher monthly payments are being driven by several factors.
- But the two biggest are high sticker prices — with many popular models now thousands of dollars more than they were a few years ago — and higher interest rates, Axios' Joann Muller reported.
The average amount financed on a new vehicle loan hit a record high of $43,899 in the first quarter of the year, up by more than $2,000 since the same time last year, per Edmunds.
- As a result, car buyers are stretching their loan terms longer, to an average of nearly six years.
Stunning stat: Even with those longer terms, 20% of new car buyers now pay $1,000 a month — or more, per Edmunds.
The situation isn't much better for used cars.
- Inventory on used car lots fell to 40 days' supply in March, its lowest point this year, and though it rebounded slightly in April, it remains tight.
- That's pushing those prices up. The average price for a used vehicle in Q1 was $29,314, per Edmunds.
Meanwhile, insurance premiums and repair costs are up 55% since the pandemic, according to the National Automobile Dealers Association.
- If you add up gas prices, insurance, repairs and the sticker prices of cars, the cost of owning one is up 47% since 2020, according to Navy Federal Credit Union.
- That's risen faster than both inflation and wages.
Yes, but: There's a silver lining for owners of used cars. They're retaining more of their value for longer, according to CarFax.com.