- The average earner would have to work 36.8 weeks to pay off the average new car bought last month
- The figure is improving, but still historically high
The average American car buyer had an easier time finding an affordable deal in July.
“In July, new-vehicle affordability improved to the best level since March, when tariffs were first announced,” said Cox Automotive Chief Economist Jonathan Smoke. “Higher incentives, higher incomes, and lower prices combined for improving affordability conditions.”
Cox Automotive owns Kelley Blue Book.
Related: Is Now the Time to Buy, Sell, or Trade in a Car?
We find the Cox Automotive/Moody’s Analytics Vehicle Affordability Index the most effective way to track the cost of car ownership. It measures how long the average earner would have to work to pay off the average new car.
The index stayed between 33 and 36 weeks for most of the decade before the COVID-19 pandemic rocked the world economy. It has been on a roller coaster ride ever since, peaking at 44 weeks in December 2022.
Related: New Car Prices Stayed Largely Steady in July
It’s approaching normal again, falling to 36.8 weeks in July.
The estimated average auto loan rate remained unchanged at 9.63% in July, which was lower year over year by 108 basis points. The average vehicle price decreased 0.1% for the month. Income growth remained strong at 3.4% year over year.
The typical monthly car payment is now $748, down 1.7% since this time last year. It peaked near $800.
