Finance

A top goal of Americans is to buy a new car, build emergency savings: study

Published

1 year ago

April 10, 2024

Approximately 22% of respondents to an Edelman Financial Engines survey mentioned their goal to buy a car in 2024. (iStock)

Americans are itching to buy new cars this year after a particularly difficult few years of record-high prices. About 22% of respondents to an Edelman Financial Engines survey said they were aiming to buy a new car in 2024.

This was just one goal survey respondents talked about most. The most prominent goal respondents wanted to achieve was saving for emergencies. More than half of those surveyed wanted to build or grow their emergency funds over the next year.

Similarly, Americans want to grow their overall wealth and save for their future. Nearly 47% of respondents wanted to grow their wealth while 42% wanted to increase their retirement savings.

Despite these lofty goals, many Americans understand that reaching them is difficult. That’s why 48% of Americans think they need help from a financial professional in order to accomplish their goals, according to the Edelman Financial study.

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MANY DRIVERS ARE SPENDING OVER 30% OF THEIR MONTHLY INCOME ON AUTO LOANS, CAR INSURANCE COSTS ALSO RISING

2024 looks like a buyers’ market for new cars

Good news is on the horizon for those considering buying a car this year. New inventory has increased by 36% year-over-year, according to data from Cars.com.

These inventory levels are closer to levels in February 2021 before shortages due to the pandemic started to affect dealerships and buyers. At the same time, search traffic on Cars.com is down for new cars, potentially helping buyers secure a better deal as dealers scramble to sell their inventory.

“2024 is probably the best year since the pandemic to buy a new car,” said Mark Schirmer, director of industry insights at Cox Automotive. “2021 and 2022 were really difficult years. Dealers are talking about discounts again…this was not happening 18 months ago. The shelves are full and there are more selections now.”

Car prices are also down slightly. The average price of newly listed cars on Cars.com was just over $49,000 in January, which is down from August 2023’s high of $50,253. Cars.com has seen a 137% increase in dealers’ EV inventory since last year. Their EV listings stay on the lot for 87 days on average, making it possible for buyers to score good deals.

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NEW CAR PURCHASES ARE ON THE RISE, BUT THERE ARE INSURANCE IMPLICATIONS

Auto insurance rates still stretching Americans’ wallets

Car prices may be coming down in 2024, but auto insurance rates are still trending up. The motor vehicle insurance index increased by 1.4% in January, according to the Bureau of Labor Statistics. Over the last year, the index increased by 20.6%.

One of the biggest insurance companies in the country, State Farm, has raised auto rates in California by 21%, the San Francisco Standard reported. These increases are likely to affect five million Californians. Initially, the company wanted to raise rates by 24.6% due to increased claims from more frequent wildfires and high construction costs.

“Carriers are playing catch-up to rate — which everyone hates,” said Karl Susman, president of the Susman Insurance Agency in Los Angeles. “I hate it too. I don’t like getting clients calling about rates going up 20, 30, 40%.”

Allstate also plans to raise its rates throughout the country, reported Insurance Business Magazine. The company plans to raise rates by 30% in California, 14.6% in New York and 20% in New Jersey. These rate hikes are expected to increase premiums by roughly $1 billion in total across the three states.

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CAR INSURANCE COSTS WILL CONTINUE TO INCREASE IN 2024: STUDY

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Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

21 hours ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

24 hours ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”