Even though auto loan rates are currently at historic lows, the average total cost to buy and finance a new car increased $200 in the second quarter of this year to $27,950, according to Comerica Bank’s Auto Affordability Index. The good news though is that the average auto loan rate has fallen to 4.1 percent.
To buy and finance an average-priced new car, it took 23.6 weeks of median family income in the second quarter. The average total cost increase of $200 is a 2.7 percent annual rate increase from the first quarter. During the same time, median family income is estimated to have risen at a 2.4 percent annual rate, essentially covering the increase in the new car cost.
"Affordability was flat in the second quarter, as rising expenditures on new cars were offset by lower interest rates," said Dana Johnson, chief economist at Comerica Bank, in a statement. "Although the national recovery slowed in the second quarter, consumers were still willing to pay more for new vehicles, albeit on slightly better financing terms than in the first quarter. As a result, affordability was roughly unchanged from the first quarter level."
Comerica Bank’s auto affordability report uses the latest data on consumer spending on light vehicles and on the terms available on auto loans. Comerica Inc. is a financial services company headquartered in Dallas, Texas.