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Average monthly car payment hits new high: $730

Inflation has hit car buyers hard. The new average car became harder than ever to afford in June. The average monthly car payment reached $730, a record high.

The average earner now spends over 42 weeks of income to pay for their new car.

The Cox Automotive/Moody’s Analytics Vehicle Affordability Index tracks the number of weeks an average earner would need to work to pay for an average new car. It remained relatively stable – moving between 32 and 36 weeks – for most of a decade. It has then flown away since the summer of 2020.

Cox Automotive is the parent company of Kelley Blue Book.

Median income rose last month, but most other factors weighed against affordability. The price paid increased by 1.6% to reach a new record. Incentives fell to a new low. The average interest rate rose another eight basis points, boosted by an interest rate hike by the Federal Reserve.

While measuring the average buyer’s ability to afford a new car helps us understand the market, Cox Automotive Chief Economist Jonathan Smoke notes, “The truth is that new vehicles are mostly bought by households with well-above-average incomes, and many of them high-income buyers can get lower-than-average interest rates. With this group, vehicle availability and low inventory are a bigger barrier than vehicle prices. »