The short answer to that question is yes. New cars are becoming more unattainable for some Americans as the average transaction price involved with buying a new car has edged upward recently. This reverses a trend of cars becoming more affordable since 1997.
The average cost of buying a new car has increased by $950 to $27,950 since the first business quarter of 2010, according to Comerica Bank, which regularly composes an auto affordability index. That’s a 3.3% increase.
To put it another way, it now takes 23.6 weeks of median household income to purchase a new car, according to Comerica. That’s exactly the same amount of time it took to buy a car in the first quarter of 2010 and about a week and half more than last year when it took less than 22 weeks of income.
Despite the nominal increase in the cost of a car, lower interest rates and an increase in personal income has kept affordability mostly in check in 2010. In the current quarter, the median family income went up 2.4% while interest rates for car loans fell to a 4.1% average.
Overall, cars and financing are far more affordable today than they were 1997, when it took about 31.5 weeks of income to buy a car, or before the recession in 2006 when it took 27 weeks of income.