New cars are getting harder to afford, and not just because of rising prices. The average monthly payment is increasing, and with prices rising faster than wages, it’s taking longer to pay off a new car.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures the length of time it takes the average earner to pay off the average new car. In September, it increased to 40.8 weeks – a record and the first time the index has crossed the 40-week mark since it began tracking in 2012.
Cox Automotive is the parent company of Kelley Blue Book.
Most factors moved against car shoppers in September. The average new car sold for a record $45,031. A worldwide shortage of microchips and other supply chain problems have left automakers building cars at a slow pace. With the supply of new cars declining but demand remaining strong, prices are rising.
Dealers have little reason to discount cars they know they can easily sell, so incentives are at a 20-year low.
Estimated median incomes in September stayed nearly flat. Only a slight decline in loan rates worked in buyers’ favor.
The estimated typical monthly car payment rose to $657. That’s 19% higher than just a year ago.
