PHOENIX — Car prices remain high, especially with rising interest rates, and the impact is being felt by drivers and businesses.
Last week, ABC15 reported on a Valley teacher who was surprised with a new car from 3A Automotive and Diesel Repair after relying on friends and family to take him to school. His story isn't unique.
Matthew Silveria with University Auto Group AZ says, within the past year, more customers are having a harder time buying a new car. He says there are a couple of reasons why.
First, he says many have bad credit after losing their jobs during the pandemic.
"They've gotten repossessed, they've lost their homes," he said.
There are also rising interest rates, meaning it's more expensive to borrow money for an auto loan.
Edmunds reports the average APR for a used car in 2022 was 10%, compared to 7.5% in 2021. That means the average monthly payment went from $530 to $563 — that's an extra $400 a year.
Cars are also more expensive now, which automakers have blamed on supply shortages leading to an increase in demand. But Kelley Blue Book reports high interest rates have also pushed automakers to build fewer inexpensive cars.
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As a small business, it's something Silveria says is out of his control.
"I have to buy it for this much money, in fact, I'll show them my profit a lot of the time. I'll say, 'this is how much I'm making,'" he said.
Silveria says the downturn is similar to what he experienced during the 2008 and 2009 recession.
But there is some hope.
The Consumer Price Index report from November shows used-car prices fell over 3% from a year ago. They are, however, still 50% higher than they were in February 2020.
