A new banking report suggests that, while we are paying slightly more for new cars in 2011, the average portion of our budgets that these purchases consume has stayed flat in the last quarter. In recent news reports, a press release from Comerica Bank describes data-gathering efforts that revealed how new car buying and 2011 auto financing has remained pegged at the same part of the “median family income.” According to Comerica, the average new car loan costs the average family 23.2 weeks of pay.
This comes along with a rise of about 2% of the average new car cost, or about $400 for buying a new car in 2011. The rising cost, plus projections on how car financing will change in the future, has analysts worried. In the Comerica report, a top banker was quoted as saying that “affordability has the potential to erode.” In other words, the longer you wait, the more you may end up paying for your new car financing deal. Fears of interest rate spikes play into this idea, since precipitous drops in the prime market rate by the Federal Reserve have lowered rates to what some finance pros describe as artificial lows.
Along with interest rate projections, some car financing experts cite changes in the sales strategies of domestic car makers. Some say Ford and Chevrolet are among manufacturers offering more features in base models, in reaction to consumer demand. But if Americans are clamoring for more extras on the average new car or truck, it’s going to cost us in terms of sticker price.
So what does all of this have to do with cutting a new car financing deal? The bottom line is that this kind of buying environment makes it even more important to shop around to lenders for the best current interest rate. Looking at third party lender financing, and possibly pre-qualification, for your new car or truck could save you thousands of dollars over the term of the loan. Check out available “generic car financing” deals from big lenders like Capital One or captive financing companies to get a better idea of the “market rate” and put yourself in the driver’s seat for arranging a car loan at the lot.