Cars Slightly More Affordable Study Claims

Remember those diamond engagement ring commercials that claimed you should spend three month’s salary for a ring? Well, that’s nothing compared to the fact that you will spend, on average, almost six months of salary to purchase your next new car (then again most marriages don't last as long as a car loan). A study by Comerica Bank of Dallas claims cars are slightly more affordable in the third quarter of 2010.

New Cars Cost on Average $27,600

The purchase and financing of an average-priced new vehicle decreased by $300 to $27,600 – a drop of 1.4 percent from the second quarter. The purchase and financing of an average-priced new vehicle took 23.8 weeks of median family income in the third quarter of 2010. Median family income is estimated to have increased 0.2 percent in the third quarter, which covers July, August and December.

“With the recovery slowing and confidence shaky, consumers bought somewhat less expensive cars on average in the third quarter, thereby contributing to the improvement in affordability,” said Dana Johnson, Chief Economist at Comerica Bank. “However, the cost of financing new carsrose somewhat, as buyers extended the length of their car loans by a month and increased the average size of their loans by $200.”

As the chart below shows, automobiles, in terms of weeks of median family income, were most expensive in 1997 when it took about 30.3 weeks. The average hit its lowest number in 2009 when the number of weeks was 22.2.