Still, an improvement is an improvement after years of skyrocketing prices and loan interest rates
March 22, 2024 at 11:35
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Since the pandemic, there hasn’t been a lot of good news for new car prices, so an improvement, even a small one, is worth noting. So let’s take a moment to celebrate the fact that last month, new cars were the most affordable they’ve been since July 2021.
A new study found that as the median income across America increased, average new vehicle prices dropped, making buying a new car easier than before. Unfortunately, neither of those values changed in a big way.
While median income grew by just 0.3 percent, average transaction prices fell by just 0.1 percent, reports Cox Automotive. However, automakers have started reintroducing incentives to help boost sales.
Read: Used EV Prices Plummet 32% As Tesla Price Cuts Impact Industry
Cox reports that the typical new-vehicle loan interest rate was 10.15 percent in February, down from 10.28 percent in January. As a result, the monthly amount consumers are expected to pay is down 0.7 percent, from $749 in January to $744 in February. The monthly payment is also down from its peak of $795 in December 2022.
As a result, the median number of weeks of income it takes to buy a new vehicle has fallen from 37.4 in January, to 37.1 last month. Compared to February 2023, the number has fallen by 6.9 percent, and as mentioned above, it’s the lowest it has been in years.
However, it isn’t quite time to rush to the nearest dealer. Although new cars are now more affordable, it’s still harder for the average American to buy a new car than it was in the decade preceding the pandemic. Moreover, in the months leading up to the global COVID pandemic, buyers needed a median of between 32 and 34 months of income to buy a new car, not 37.
Still, the graph is finally moving in the right direction after years of tough times that threatened to make the dream of new vehicle ownership impossible for many Americans. We reckon that’s good news, don’t you agree?
