Buying and financing a car is becoming less and less affordable, according to the latest data from Comerica Bank. An average-priced new car required 24.2 weeks of median family income in the third quarter. That's a 2.6 percent increase or $650 more than in the previous quarter. While that may not seem like a lot, for many car buyers it is equal to about two additional car payments.
It's been getting steadily more challenging to afford a new car since 2009. "A key issue in falling auto affordability is weak income growth, which we have seen through 2011," says Robert Dye, Comerica's chief economist, in the report. "Tepid job gains and flat wages are keeping income growth in check, and this is a drag against a typical post-recession rebound in auto sales."
While auto affordability has been steadily falling the last two years, cars have still remained more affordable than they have been almost anytime in the last 15 years. In late 1996, the average-priced new car required more than 30 weeks of median family income. In 2006, auto affordability was at 27 weeks of median family income.
While cars are becoming increasingly less affordable, car shoppers with good credit can find some low interest rates as well as good deals on both new and used cars right now as dealers try to boost sales numbers before the year draws to a close.
Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.