Experts say that millions of car owners in the United States are putting off car maintenance amid rising costs.
Jared Levy, chief markets strategist of Peak American Investment Advisers, says with budgets stretched thin, there is “a growing trend of ‘deferred maintenance’” among U.S. auto owners, as Fox Business reported. According to vehicle data website Carfax, over 30 million cars active on U.S. roads are behind on oil changes and tire rotations.
Last month, The Dallas Express reported that U.S. household debt climbed to its highest level in the third quarter of 2024. Compared to Q2, total household debt rose 0.8% to an all-time high of $17.94 trillion. Elevated levels are a function of the still historically high Federal Funds Rate of 4.75%, inflation, and the growing financing amounts taken on by consumers.
During the COVID-19 pandemic, for example, when inventory was in short supply, some new vehicles increased in price by as much as 20%. Consumers financing car purchases at higher interest rates were left with substantially higher monthly debt obligations.
“I think all of this is due to a four-year inflation period along with high interest rates which have caused a spike in food prices, insurance costs, housing costs … all of which have hit the consumer in the pocketbook and evaporated any free cash the consumer may have,” Celebrity Motor Cars owner Tom Maoli told Fox Business.
In September, the Federal Reserve said that auto loan delinquency rates “rose substantially.” According to the Fed, higher monthly payments are likely one of the culprits for the growing delinquencies.
Between January 2017 and January 2020, average monthly car payments rose from $430 to $470, a roughly 9% increase over three years. However, from January 2020 to January 2023, during the pandemic, payments jumped from $470 to around $600, a nearly 28% rise over an equivalent period of time.
The Federal Reserve is expected to cut rates a further 25 basis points this month, a move that could offer some relief to consumers looking to finance a vehicle.