Study: Price of new cars on the rise, but still affordable

May 23, 2012 12:00 AM

While the economic downturn may have taken a toll on many families' finances, today's new cars are actually quite affordable, according to a recent report by Comerica Bank.

The bank has tracked auto affordability for several years, reporting the figure in terms of the number of weeks a family would need to save for a new car based on the average household income. The most recent report shows new cars in the first quarter of 2012 require 23.2 weeks of saving, a 1.2 percent increase over the fourth quarter of 2011. While this represents an approximate $300 jump in price, the financial institution says cars today are more affordable than they have been in the past.

"Auto affordability was down slightly in the first quarter of 2012, but remains very high by historical standards, contributing to the upward trend in auto sales visible from mid-2011 through early 2012," said Robert Dye, chief economist of Comerica Bank in Dallas. "Households have paid down debt, and that has created space in household budgets, allowing many families to take advantage of the current high affordability of new cars... These favorable trends are helping consumers to feel more confident about unleashing their pent-up demand for automobiles."

Those buying a new car should be sure they don't solely factor in the monthly loan payments when determining whether or not they can afford a new car. It's also important to set aside money for regular vehicle maintenance and an emergency fund that can take care of any auto repair that pops up.

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