There are plenty of ways to determine what’s “affordable” when it comes to a new car, truck, or crossover. But only one that really matters: What a buyer is willing to spend.
Cox Automotive has a specific measurement that can determine “affordability.” They call it the “Vehicle Affordability Index.” Clever. It’s a monthly measure of the number of median weeks of income needed to purchase a new vehicle.
Currently it sits at 35.5 weeks for August. It’s dipped slightly each of the last four months, when it was 34.9 weeks in May. Basically, it’s how many weeks of pay is needed to buy a vehicle. However, it’s an average. Plus, it’s not really the definition of affordable. It’s some percentage of income someone with a lot of letters after their name has determined is optimal for an overall budget.
The current average transaction price is $50,089. It’s the number you get after you take the sticker price and exclude incentives, trade-in, taxes, fees or finance and insurance. The average monthly car payment? $770, up slightly from July. That’s what people are willing to pay. However, what is affordable in your mind? $35K? $435 a month? Let us know what you think is affordable.
[Images: Toyota, Ford]
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