TEXAS, USA — Unless you have a trunk full of money, baby, whatever you are driving: Change the oil, check the belts, drive it gently and maybe even surround it with bubble wrap! That’s because inventory is still running really low, so new vehicle prices are running at a record high.
Cox Automotive estimates that at the end of July, there were 1.09 million available unsold vehicles in the U.S. That’s only about a 37-day supply of new vehicles.
For comparison, inventory in 2019 reportedly averaged 3.66 million new vehicles, and there was an average of 90 days worth of inventory.
‘Forced financing’ at the dealership
So, there has been serious competition for the relatively few automobiles for sale. In that environment where consumers are trying to edge each other out, some dealers in Texas have been adopting a practice of "forced financing" at the dealership, where they aren’t accepting your pre-approved financing or even your cash.
Instead, some dealers have been insisting that consumers use their lenders, which allows dealers to make extra money by adding a little bit to the rates offered by their lenders. We have done several installments on this phenomenon. Go here, here, here, and here to see those prior reports.
Have you experienced 'forced financing at the auto dealership?
Have a seat…so we can talk about prices and delinquent payments
According to Cox Automotive, the average automobile transaction price just set another record, climbing to $48,182. Again, that is for the average new automobile.
And Texans are paying more each month than the rest of the country, according to Experian. They say the average auto lease in Texas is $578 per month and that the average auto loan payment in Texas is $622 monthly.
Perhaps not surprisingly, Experian also reports that Texas now has more delinquent auto payments than most states. 10.1% of Texans are 30+ days late on payments. 5.5% of Texans are 60+ days overdue. And 4% of Texans are 90+ days behind on auto payments.
Barron’s reports that repossession companies are buying car lots and banks are leasing extra land just so they’ll have enough space to park all the cars and trucks that could get repossessed.
If that happens to you, it really hurts you financially. Experian offers a lot of good advice here for avoiding repossession if you are falling far behind on your auto payments.