WSJ has an article hitting on how rising interest rates are hurting consumers. Not exactly stunning stuff.
But this graph blew me out of the water. Car payments are now $800/mo new and $600/month used? The most I’ve paid for a car is $20,000 (used) and the payments were a little under $400/mo.
But sure enough, for a moderately priced car that’s the math.
Of course, the interest rates only tell part of that story: doubling the interest rate only increases the payment by $50/mo. That’s also misses part of the picture, at current inflation rates that $50/mo will be “worth”$60. (5 years of 4% inflation)
The prices of cars are so much higher across the board. These two charts from FRED show the relative price of used cars and new cars. Note: this doesn’t show direct prices, it shows the increase or decrease compared to 1984
Which means my $20,000 purchase with 2018 interest rates would now be $30,000 +/- Double the interest rate and I’m at nearly exactly $600/mo: right what WSJ reported.
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