The average price of a new vehicle fell at the end of 2023, but now that we’re into 2024 does it mean it’s easier to buy a new car? Not exactly.
The cost of a new vehicle can be measured in a variety of ways, but determining its cheaper and worth it may be most difficult of all. However, if you’re talking about the affordability of a new vehicle, well, yes, it appears that it’s more affordable to buy a new car, truck or utility vehicle.
“Due to an increase in average transaction prices, new-vehicle affordability worsened month over month in December,” said Cox Automotive Chief Economist Jonathan Smoke, in a statement. “However, year over year, it is in much better shape, and new-vehicle loan rates are down from their peak in October.”
Improved loan terms
The typical payment increased 1% last month, offsetting the 0.3% rise in median income. The average transaction price — what a buyer paid after all incentives and rebates were applied — rose slightly by 1.3%, Kelly Blue Book noted.
Fortunately, the average loan interest rate for a new vehicle declined to 9.66% from 10.27% in November. As a result of these changes, the estimated typical monthly payment increased 1% to $770 from a revised $762 in November. The average monthly payment peaked at $796 in December 2022.
This assumes you were able to get a vehicle loan. Credit availability tightened in December compared to year-ago conditions.
Getting a loan
Credit access in all channels and lender types ended 2023 tighter than a year ago. Compared to February 2020, credit access was tighter in all channels except for used sales through independent dealers and for loans from auto finance companies.
Trying to get credit to buy a new vehicle was tougher across the board last month and in all of 2023. Auto-focused finance companies were the most accessible while credit unions, often thought of as the most flexible, pulled in the reins the most.
Just how long to buy one
If you want to know how long it’ll take you to save for a new vehicle, the good news is that its coming down to more historical numbers. Typically it took between 33 and 36 weeks of income to buy a new vehicle.
However, the topsy-turvy automotive world changed the rules the game in recent years with that number quickly rising up to as much as 44 weeks just over a year ago. However, the number of median weeks of income needed to purchase the average new vehicle increased to 38.6 weeks from a downwardly revised 38.3 weeks in November. The November number of weeks was the lowest since August 2021.