Monthly car payments have crossed a record $700. What that means The average cost of a new car is also at the highest on record, topping $47,000 a pop. At this rate, an essential household purchase is starting to feel like a luxury in America.

Monthly car payments have crossed a record $700. What that means

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MELISSA BLOCK, HOST:

Cars hold a special place in American popular culture.

(SOUNDBITE OF SONG, "TAKE IT EASY")

EAGLES: (Singing) It's a girl, my Lord, in a flatbed Ford slowin' down to take a look at me.

(SOUNDBITE OF SONG, "LITTLE RED CORVETTE")

PRINCE: (Singing) Little red Corvette, baby, you're much too fast.

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TRACY CHAPMAN: (Singing) You got a fast car. I got a plan to get us out of here. I been working at a convenience store.

BLOCK: The thing is, it's getting way more expensive to own a car. New car payments have skyrocketed to around $700 a month, and that's the highest on record. NPR's Brittany Cronin explains why.

BRITTANY CRONIN, BYLINE: Fast cars, getaway cars, drive-thrus, road trips - cars are a central feature of American life. That's what the commercials tell us, at least.

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UNIDENTIFIED PERSON: Here's a couple of things America got right - cars and freedom.

CRONIN: More than a symbol of freedom, cars play an essential role in the economy. People rely on cars to get to work, school drop-offs, doctor's appointments, grocery shopping. But if you're looking to buy a new car, you better have deep pockets - like, $700 a month just for a car payment deep pockets.

IVAN DRURY: I joke with people that every new car purchase is a luxury car purchase. I don't care what you're buying.

CRONIN: Ivan Drury is with the car buying company, Edmunds.

DRURY: Unfortunately, for the segment of the population that probably needs it the most, it's getting more and more out of reach.

CRONIN: It all comes back to the computer chip shortage that started during the pandemic - those teeny-tiny microchips that control everything from window motors to touchscreen navigation systems. Automakers can't get their hands on enough of them, so they've been forced to make fewer cars.

DRURY: We're just trying to claw and fight our way into getting enough chips in order to get back to a level that consumers want, which is a lot more than what we're seeing today.

CRONIN: To get more bang for their buck, automakers are putting their chips in bigger, fancier, more expensive cars - big SUVs loaded with features. That also means automakers are making fewer compact cars and sedans - their smaller, cheaper cars. And so prices keep climbing. The average cost of a new car topped $47,000 in May. There's not much relief in the used car market either. Used cars are hard to find. Average payments are just over $550 a month. Drury says, get used to these prices.

DRURY: We're not going to see this sudden drop-off in price any time soon because there doesn't seem to be any resolution for the chip crisis.

CRONIN: Chip manufacturers can make a lot more money placing their chips in video game consoles, like the newest PlayStation, or even appliances like smart refrigerators. So for anyone who needs a car today, it's going to cost you.

Johnny Navarro experienced that sticker shock firsthand after he totaled his car in an accident in LA. He went to the dealership only to find that cars he'd looked at a couple of years ago had doubled in price on their monthly payments.

JOHNNY NAVARRO: To see it jump from, like, $300 to 600 for a Corolla or a Civic was like - I should be driving, like, a Mustang for that much money, you know? So it's like - it was crazy.

CRONIN: He did find a used Lexus. And by spreading his payments out, he got his car payment down to $580 - over $200 more per month than he used to pay. And that doesn't include insurance, gas or parking.

NAVARRO: So, yeah, I'm definitely going to have to probably pick up a shift or two more a week.

CRONIN: Driving cuts his hourlong commute to his job as a server at a restaurant in Santa Monica in half. But the car isn't just for his commute.

NAVARRO: I just like to ride in my car with friends and listen to music. I actually have a carpool karaoke little microphone. So (laughter) that's always really fun.

CRONIN: Navarro is like a lot of Americans. He loves his car. For as long as he can afford it, he's going to own one. Brittany Cronin, NPR News.

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