The average new car buyer in December took on a monthly payment of $777.
Record-high new car prices have combined with high interest rates driven by the Federal Reserve to make cars harder to afford than ever before.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index measures how much of an American’s working life goes toward car payments. By the end of December, the index says, the average earner needed to work 44 straight weeks to pay off the average new car.
Cox Automotive is the parent company of Kelley Blue Book.
The index grew by 7% in 2022. If current trends hold, 2023 could see Americans working nearly a year to pay off the average new car purchase.
“The market’s biggest problem is affordability driven by the high level of interest rates,” says Cox Automotive Chief Economist Jonathan Smoke. Access to auto credit tightened in December as lenders asked for higher down payments and granted loans at higher interest rates.
There is some hope that a growing supply of unsold cars, however, could see discounts return later this year.
