It was recently reported that the average car payment in the U.S. is a whopping $523. The average total amount borrowed for a new car comes to $31,453.
Making a $523 monthly car payment is now the norm, but it stands in stark contrast to economic indicators. For one, only roughly half of Americans own stocks, which means they haven’t benefited from the near-precipitous rise in stocks since 2009.
With only 37% of Americans saving for retirement in an IRA, it leads to the question of why we all spend so much on our cars. One thought is that FOMO, or the fear of missing out, is driving consumers to pursue short-term gratification at the expense of long-term goals like saving for retirement.
With social media, we not only see what our peers and favorite celebrities are doing, but also the cars they drive and ride in. In my mind, there’s no doubt that this plays a role.
The reality is that America’s new car addiction is preventing us from investing for our future. A $523 payment may not seem outrageous at first glance, but the cost of a new vehicle is much higher when you look at the bigger picture.
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