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Why Do Car Prices Keep Rising?

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A decade or two ago, most non-luxury automakers offered multiple models with starting prices as low as $10,000 on base-trim models. Today, you’d be hard-pressed to find a brand-new car with a starting MSRP below $18,000, and luxury rides have nearly doubled in price.

Car prices continue to rise year after year, making it difficult for many people to afford a new ride when they need it. Why do car prices keep rising? Here are the main reasons.

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Three major reasons car prices keep rising

Inflation: This is the most obvious influence on rising MSRPs, since pretty much everything in America is rising in cost. The dollar doesn’t have the same value that it used to, so you need more Benjamins to acquire the same product.

New technology: Back in the day, cars were basically metal boxes on wheels. You had to pay extra even for power windows. Now, most bare-bones cars models come with a real-time rearview camera, a digital touch screen, Bluetooth integration, cruise control, and a slew of complex safety systems. Those added standard features don’t come for free: Their cost gets included in the overall price of the car.

Company costs: Recalls, tariffs, and programs to create new technology (like autonomous systems) cost auto manufacturers money, which is often passed down to the consumer through price increases.

And those costs are just the ones that pertain to the manufacturer’s suggested price. Higher finance rates, insurance costs, and maintenance costs are all driving up the long-term cost of owning a car — and it doesn’t look like cars will become any less expensive in the future.

If you’re considering buying a car but are intimidated by the rising costs of brand-new cars, consider buying a certified pre-owned or used model. Even a vehicle with a couple years of use under its belt will carry a substantially lower price tag because of initial depreciation.

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Source: Lease Guide