Are Cars Becoming Less Affordable for the Average American Family?

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. 

New cars become slightly less affordable, index shows (USA Today)