With inflation, shortages and shrinking household budgets, new car ownership may seem out of reach.

There may be a light of hope in the car sector, though.

What You Need To Know

  • Car prices have risen 30%, a Bankrate economist says

  • Look at the overall price of a car, not the monthly payment

  • Financial experts expect interest rates to come down slightly by the end of 2024 or early 2025

One economist says that inventory is no longer an issue and that since last year, prices have been falling, highlighting two specific markets that might have better opportunities for buyers.

"We’re seeing year-over-year declines in both the prices of new and used cars. But used cars are falling more sharply," says Mark Hamrick, a senior economic analyst for Bankrate.com. "I think we’re still in a bad place when it comes to affordability with automobiles because we’re talking about a steady rise in the prices of cars since before the pandemic and then the higher cost of financing associated with higher interest rates.”

He adds the overall cost of buying a car has risen 30% since 2020.

Hamrick says that there are buying opportunities for higher-end cars and electric cars moreso than affordable cars due to greater demand for them.

He cautions to not focus on the monthly payments, but to rather look at the long-term total costs of buying the vehicle.

He adds that interest rates should be coming down around the end of the year or early next year.