It’s harder than ever to afford a new car. The average American who bought a new car in September signed up for a monthly payment of $738.
We pay for the things we buy not just with our money but with the time we spend working to afford them. The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures the number of weeks the average earner would need to work to pay off the average new car. It increased to a new record high — 42.2 weeks — last month.
Cox Automotive is the parent company of Kelley Blue Book.
The increase comes despite a few factors getting better for car shoppers. Median income grew 0.4% last month, while the price of the average new car slipped for the first time in five months. It now stands at $48,094.
But new car incentives fell to the lowest level they’ve reached in the 20 years we’ve been tracking them. The average interest rate increased, in line with the Federal Reserve’s efforts to raise it.
New-vehicle affordability in September was much worse than a year ago when prices were lower, incentives were higher, and rates were much lower. The estimated number of weeks of median income needed to purchase the average new vehicle in September was up 9% from last year.
