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America's middle class increasingly difficult to buy cars

With the average car price of 35,000 USD, while the income is unchanged, the low interest rate also does not drag many people to the dealer.

In the US, car prices in 2019 increased by $ 460 compared to 2018, according to Automotive Lease Guide. While rising prices are not surprisingly large, buying new cars is out of reach for some middle-class families, according to CBS News.

If the average price of a new car is $ 35,000, the average loan for a new car will be $ 32,200 in the second quarter of 2019. The cost of owning a car and truck today is about 38% higher than it was 10 years ago, with the transaction price of some popular SUVs and pickups increasing 60-70% compared to 2009.

If placed on the scale, the other side will be income. Actual average income in 2009 was about 59,000 USD, in 2018 was 62,000 USD. That is, after 10 years, income increased by 5%, while car price increased by 38%.

A family in the US, with four members, is classified as a middle class if the minimum income is 52,200 USD. If the family of two, the figure is 36,900 USD, according to Pew Research. Financial experts say that the reasonable expense for a car is 10-15% of the monthly income. That is, spending $ 400 per month is acceptable for a middle-class customer when looking to buy a new car. But's calculation of a car loan shows that, in order to cope with $ 400 per month at a 4% interest rate, the $ 32,000 loan can also last up to 84 months, or seven years.

These factors lead to the trend of more people renting cars. In fact, the car rental period has become increasingly long in recent years, proportional to the increase in the price of new cars. As a way to reduce the monthly cost of buying a car, some customers sign a car lease for up to six or eight years, with the average growth now being 60 months.

At first, lower payments and longer loan terms seem to be a good idea, but it's not true. A retailer shared that a longer loan term with more expensive cars could result in an overdue loan repayment.

However, not every new model is beyond the reach of middle-class families. The list of the 10 cheapest new cars in 2019 includes a range of hatchback and sedan models starting at less than $ 17,000. In addition, used cars also have advantages. The average age of cars in the US is increasing, meaning that old cars can still serve the owner for a long time.

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