New cars are costing over $500 a month to finance, making affordability less possible for middle and low income buyers.
Kelley Blue Book reported estimated average transaction price (ATP) for light vehicles in the United States was $34,342 in March 2017.
Experian reported consumers are turning to longer-term loans to help reduce costs of monthly payments. The average loan amount for a new vehicle reached a record high of $30,621 in Q4 2016. The average loan amount for a used vehicle also reached record levels, jumping from $18,850 in Q4 2015 to $19,329 in Q4 2016.
This does not fair well for most consumers who at or the below the median income. The ABAI price for a car that a consumer can afford should cost $18,551.The Auto Buyer’s Affordability Index (ABAI) is a measure of the current affordability of new cars in terms of the U.S. median income. The ABAI is is based on the 20-4-10 auto financing rule – 20% down for four years with 10% payment.
Median income Americans, if they are prudent can barely afford a compact car, if you look at the average transaction prices from Kelley Blue Book which follow.
The Experian report also showed the number of consumers opting for auto loans with terms of 73 to 84 months on their new vehicles increased from 29 percent in Q4 2015 to 32.1 percent in Q4 2016. In the used car market, there was an increase in 73- to 84-month loans from 16.4 percent in Q4 2015 to 18.2 percent in Q4 2016.
This is can be a very dangerous situation for car buyers, because down the line, the car buyer may owe more than the car is worth.
For consumers who still want to drive something new, leasing a new vehicle costs an average of $92 less per month compared with financing. The average monthly payment for a new leased vehicle is $414, versus $506 per month for a new vehicle purchase. The number of consumers who chose to lease a new vehicle increased slightly from 28.87 percent in Q4 2015 to 28.94 percent in Q4 2016.
Other key findings for Experian Q4 2016:
- The average monthly payment for a new vehicle loan was $506, up from $493.
- The average new vehicle lease payment was $414, up from $412
- The average monthly payment for a used vehicle loan was $364, up from $359.
Kelley Blue Book ATPs
|
Segment |
March 2017 Transaction |
February 2017 Transaction |
March 2016 |
Percent |
Percent |
|
Compact Car |
$20,563 |
$20,595 |
$20,146 |
-0.2% |
2.1% |
|
Compact SUV/Crossover |
$28,395 |
$28,414 |
$27,953 |
-0.1% |
1.6% |
|
Electric Vehicle |
$34,086 |
$34,194 |
$38,834 |
-0.3% |
-12.2% |
|
Entry-Level Luxury Car |
$41,678 |
$41,730 |
$40,643 |
-0.1% |
2.5% |
|
Full-Size Car |
$34,606 |
$34,042 |
$34,093 |
1.7% |
1.5% |
|
Full-Size Pickup Truck |
$45,252 |
$45,315 |
$46,385 |
-0.1% |
-2.4% |
|
Full-Size SUV/Crossover |
$60,670 |
$60,336 |
$59,944 |
0.6% |
1.2% |
|
High Performance Car |
$90,464 |
$93,038 |
$91,391 |
-2.8% |
-1.0% |
|
High-End Luxury Car |
$95,385 |
$95,973 |
$93,500 |
-0.6% |
2.0% |
|
Hybrid/Alternative Energy Car |
$24,383 |
$24,851 |
$26,398 |
-1.9% |
-7.6% |
|
Luxury Car |
$56,425 |
$56,628 |
$56,550 |
-0.4% |
-0.2% |
|
Luxury Compact SUV/Crossover |
$40,536 |
$40,524 |
$41,234 |
0.0% |
-1.7% |
|
Luxury Full-Size SUV/Crossover |
$82,791 |
$82,657 |
$84,468 |
0.2% |
-2.0% |
|
Luxury Mid-Size SUV/Crossover |
$55,233 |
$55,480 |
$55,063 |
-0.4% |
0.3% |
|
Mid-Size Car |
$25,031 |
$25,072 |
$25,041 |
-0.2% |
0.0% |
|
Mid-Size Pickup Truck |
$31,986 |
$32,416 |
$31,490 |
-1.3% |
1.6% |
|
Mid-Size SUV/Crossover |
$37,398 |
$37,396 |
$37,524 |
0.0% |
-0.3% |
|
Minivan |
$33,311 |
$33,223 |
$32,406 |
0.3% |
2.8% |
|
Sports Car |
$30,805 |
$30,379 |
$31,557 |
1.4% |
-2.4% |
|
Subcompact Car |
$16,421 |
$16,393 |
$16,228 |
0.2% |
1.2% |
|
Subcompact SUV/Crossover |
$24,165 |
$24,168 |
$24,847 |
0.0% |
-2.7% |
|
Van |
$34,519 |
$34,744 |
$34,532 |
-0.6% |
0.0% |
|
Grand Total |
$34,342 |
$34,475 |
$33,755 |
-0.4% |
1.7% |
|
*Kelley Blue Book average transaction prices do not include applied consumer incentives |
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