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Car Payments Hit Records — A Growing Pressure Point In Client Budgets
Plus, the latest in market news.
Happy Sunday, and welcome to Benzinga’s financial advisor newsletter.
Today we’re talking about budgeting, and how car payments can devastate a financial plan if not done correctly. According to Edmunds, nearly 20% of new-car buyers now face $1,000+ monthly payments, with a record 22% stretching loans to 84 months to make it work. Read on to see why this record-setting shift shouldn’t be ignored as consumers squeeze higher costs into already tight budgets.
Plus, a look at all the top stories and market activity from this past week.
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Table of Contents
INDUSTRY CHATTER
As we talked about a few weeks ago, millions of Americans now carry more credit card debt than emergency savings. Part of that imbalance can be traced back to a simple reality: everything costs more — and cars are near the top of that list.
A $1,000 monthly car payment used to be a rarity, the kind of number you’d only see on a high-end luxury model. Fast-forward to today, and the average new car costs more than $50,000. The payments that once looked like outliers are quickly becoming the norm.
According to new data from Edmunds, nearly 20% of new-car buyers are taking on monthly payments exceeding $1,000. To make matters worse, many are making it work by stretching the loan with more than 22% of borrowers now opting for 84-month terms, a new record high.
Consumers aren’t necessarily overspending in a reckless way — they’re trying to make a more expensive market fit inside their existing budgets. Bigger vehicles, higher trim levels, and tech-heavy features are pushing prices up, and buyers are using the levers they have to manage the monthly squeeze.
For advisors, this trend is worth paying attention to because vehicle financing tends to fly under the radar. A seven or eight year auto loan doesn’t feel like a major long-term financial decision for many, but it quietly affects a client’s cash flow, savings capacity, and flexibility for years.
Younger buyers — especially millennials and Gen Z — often prioritize features, tech, and luxury, even if it means taking on longer loans, while older buyers may be more conservative yet still tempted by high-end SUVs or EVs. These motivations matter, because this isn’t just a car story — it’s a cash-flow and risk story.
Clients are making borrowing decisions that feel manageable month-to-month, but can create bigger costs down the road such as negative equity traps that spills into other parts of their financial life. To sum up, a $1,000 car payment is no longer an anomaly, and it’s a reminder that even everyday purchases can ripple through budgets, emergency savings, and long-term goals.
WEEKLY MARKET RECAP
The Fed delivered its third straight and highly anticipated rate cut, trimming the fed funds target range by 25 basis points to 3.50%–3.75%, but the details of the meeting told a more complicated story.
The meeting was deeply divided. Governor Stephen Miran favored a larger cut, while Kansas City Fed President Jeffrey Schmid and Chicago Fed President Austan Goolsbee voted to keep rates unchanged.
Fed Chair Jerome Powell signaled the easing cycle may now be put on hold, stressing the need to assess how the economy responds to cumulative rate cuts. In practical terms, markets are now priced in a very low probability of another cut in January unless labor market conditions deteriorate materially.
Wall Street responded with a pronounced sector rotation. Investors moved into rate-sensitive areas of the market while trimming exposure to technology stocks. The Dow Jones Industrial Average and the small-cap Russell 2000, both light on tech weight, climbed to fresh record highs.
Sentiment around artificial intelligence stocks cooled again after Oracle (ORCL) reported earnings, raising fresh investor concerns.
Oracle shares fell roughly 13% over the week, marking their worst weekly performance since March 2018, as investors focused on rising capital expenditures tied to AI data centers and a potentially higher debt burden.
Even the chip giant Broadcom (AVGO), up nearly 80% this year and fresh off an earnings beat, sold off sharply on Friday as investors reconsidered how much capital intensity they're willing to tolerate.
The race to acquire Warner Bros. Discovery (WBD) took an unexpected turn. Paramount Skydance (PSKY) launched a hostile $30-per-share tender offer, surpassing Netflix (NFLX)'s agreed $27-per-share bid.
Paramount's move bypassed Warner Bros. Discovery's board and appeals directly to shareholders, raising the stakes in what is becoming one of the most consequential consolidation battles in global media.
Meanwhile, the rally in precious metals continued to defy gravity.
Silver grabbed headlines this week, surging to record highs near $64 an ounce, up almost 120% year-to-date and on track for its strongest annual performance since 1979. Shares of gold and silver miners outperformed every major industry group on Wall Street.
In autos, Michigan-based stocks continued their strong rally momentum. General Motors (GM) climbed to new highs near $81 per share, extending a roughly 50% gain over the past two months. Ford Motor (F) also ended the week higher, rising about 6% to roughly $13.80.
By the end of the week, the takeaway felt clear. The market is no longer trading as if tech and AI are the only games in town.
THE WEEK AHEAD
Economic Data
Monday: Home builder index, Fed speeches (Miran, Williams)
Tuesday: Unemployment rate, hourly wages, retail sales, S&P PMI
Wednesday: Fed speeches (Waller, Williams, Bostic)
Thursday: Initial jobless claims, CPI, Philadelphia manufacturing survey
Friday: Existing homes sales, consumer sentiment
Earnings
Click here for the full calendar of economic data and earnings reports.
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