Car shoppers are choosing to spend less on a new car, truck or SUV. According to Comerica Bank, consumers who bought a new vehicle in the fourth quarter of 2010 spent $700 less than shoppers who bought in the third quarter.
In the third quarter of 2010, the average total cost to buy and finance a new car was $27,600, according to Comerica Bank’s Auto Affordability Index.
"Consumers continued to opt for less expensive cars in the fourth quarter, even as auto loan rates rose and the national recovery gradually reaccelerated," said Dana Johnson, chief economist at Comerica Bank. "The average interest rates on auto loans rose to 4.6 percent, the highest since the first quarter of 2009. Looking ahead, affordability could erode as the cost of financing a new car increases due to rising interest rates."
During the fourth quarter of 2010, car loan rates increased by 0.5 percent. It took 23.2 weeks of median family income to buy and finance an average-priced new vehicle during that time, Comerica Bank reports, which is an improvement in affordability of 0.5 weeks.
Although auto loan rates for new vehicles are climbing, shoppers can currently take advantage of 0 percent car loan financing and discounted leases across most automakers. Zero percent auto loan rates and discounted leases require a higher credit score to qualify, but there are also lease deals and low car loan rates for shoppers who have good credit.