Overview

Episode Theme:
This episode of Your Money Minute with host Jessica Ettinger explores the growing dissatisfaction among car dealers as new car prices hover at record highs. The segment draws on expert insights and new data showing both dealers and buyers grappling with costly vehicles and the increasing prevalence of long-term auto loans.

Key Discussion Points & Insights

• Dealer Sentiment Hits Lows

  • Dealers are currently pessimistic about their business prospects, marked by slow consumer traffic and negative outlooks not seen since the COVID-19 pandemic in 2020.
  • (00:10) Phil LeBeau reports:

    "Dealer sentiment for the third quarter, it's not good. In fact, they are seeing slowing traffic. It is the lowest dealer sentiment on consumers buying new vehicles since 2020."

• Record-High New Car Prices

  • The price of new vehicles remains at or near historic highs, making the buying process difficult not just for consumers but also for sellers.
  • (00:00) Jessica Ettinger introduces:

    "Car dealers are really down on their business with new car prices at or near record highs."

• Long-Term Financing on the Rise

  • To cope with higher sticker prices, more buyers are being pushed into extended loan terms of seven years (84 months) or even longer, in order to make monthly payments more bearable.
  • Dealers are reportedly telling customers that such lengthy loans are necessary for affordability.
  • (00:20) Jessica Ettinger explains:

    "You think dealers want to tell you that if you want that new car, you're going to have to take a seven year loan to make the payment work for your budget."

  • (00:31) Phil LeBeau:

    "The average monthly payment for a new vehicle is $748. When we talk with the people at Experian, they are noticing more people taking out seven and eight year loans."

• Potential Problems with Long Loans

  • Many buyers may want to sell or trade in their vehicles before finishing such lengthy loans, creating potential debt issues or negative equity situations.
  • (00:41) Jessica Ettinger adds:

    "A seven or an eight year loan for a new car many Americans will want to get rid of before the loan is even paid off. A seven year loan is 84 months."

• Data Confirms the Trend

  • Experian has observed not only more 84-month loans but also deals extending beyond 84 months.
  • (00:52) Melinda Zabritsky (Experian):

    "Well, we have definitely seen growth in the 84 month loans and we continue to see some growth in lo that are above 84 months, you know, 85 plus."

Notable Quotes & Memorable Moments

• (00:10) Phil LeBeau:

  "Dealer sentiment for the third quarter, it's not good. In fact, they are seeing slowing traffic. It is the lowest dealer sentiment on consumers buying new vehicles since 2020."

• (00:31) Phil LeBeau:

  "The average monthly payment for a new vehicle is $748... more people taking out seven and eight year loans."

• (00:41) Jessica Ettinger:

  "A seven or an eight year loan for a new car many Americans will want to get rid of before the loan is even paid off."

• (00:52) Melinda Zabritsky:

  "We have definitely seen growth in the 84 month loans and we continue to see some growth in lo that are above 84 months, you know, 85 plus."

Timestamps for Important Segments

• 00:00 – 00:10: Introduction to the topic – dealers unhappy due to high prices
• 00:10 – 00:20: Phil LeBeau on plummeting dealer sentiment
• 00:20 – 00:41: Discussion of average car payments and rise in long-term loans
• 00:41 – 00:52: Risks of lengthy loans and negative equity
• 00:52 – 01:02: Data from Experian's Melinda Zabritsky highlights ongoing loan term growth
• 01:02 – End: Closing remarks and suggestion for further information

Conclusion

This quick episode highlights a critical issue for both car buyers and sellers: the unsustainable trend of record-high auto prices and the resulting wave of long-term loans, which industry experts and analysts warn could have financial repercussions for many Americans eager to buy—but possibly unable to afford—their next new car. For more on navigating current auto market challenges, listeners are directed to CNBC's website.