new Car Affordability Crisis Deepens as Monthly Payments Soar Past $1,000
A significant portion of new car buyers are now facing monthly payments exceeding $1,000, an all-time high, according to recent data. This trend is exacerbated by factors including pressure from former President Trump’s tariffs on imported vehicles and car parts, which have driven up costs for consumers.
Joseph Yoon, consumer insights analyst at Edmunds, noted that buyers are stretching their budgets, opting for longer loan terms and higher monthly payments to acquire new vehicles. He cautioned that these affordability challenges are deeply entrenched and unlikely to be instantly resolved by Federal Reserve actions on interest rates.
Student Loans: Rates Fixed, But Other Headwinds Emerge
Federal student loan interest rates are set annually based on Treasury note auctions and remain fixed for the life of the loan. For the 2025-26 academic year, undergraduate federal student loan rates are 6.39%. While existing borrowers are shielded from rate fluctuations, many are encountering other difficulties, including fewer federal loan forgiveness options and a popular repayment plan currently on hold.Savings Accounts Offer Strong returns
In contrast to the borrowing landscape, savings accounts continue to provide attractive returns, with top-yielding online accounts offering over 4%, according to Bankrate. While the Federal Reserve does not directly influence deposit rates, these yields are generally correlated with changes in the federal funds rate. The current habitat, with savings rates exceeding inflation, is considered advantageous for savers. Greg McBride, chief financial analyst at Bankrate, advises individuals to capitalize on this favorable period for saving.