Seems we’ve been collectively worrying a lot this year, and for good reason. There’s the housing market, the hiccupping stock market, looming inflation, and the cost of healthcare. And most Americans are predicting $4-a-gallon gas by summer.
But if you have financial stability, it’s a great time to buy. Auto affordability actually improved modestly in the fourth quarter, according to the latest Comerica Bank Auto Affordability Index, released Thursday. The average total purchase price of a light vehicle, including finance charges, fell $300 in the fourth quarter of 2007, to $28,715.
In the index, compiled by the now-Texas-based bank’s chief economist, Dana Johnson, the purchase of an average-priced new vehicle took 24.4 weeks of median family income, down 0.5 weeks from the third quarter, and down 1.8 weeks from year-ago levels as measured by the index.
Cars remain at one of their most affordable levels in decades, according to the long-term trends indicated by the index. A high of nearly 31 weeks was reached in 1994.
Johnson pointed out that a significant reduction in the interest rate on car loans has helped reduce the cost of owning a new car. “With the economy weak and interest declining, consumers are likely to find even better deals on new cars over the first half of 2008,” he stated in the report.
Having been to dealerships several times recently, I can attest that it does seem you can get more for the dollar on a new vehicle now than in recent years. Of course, my healthcare plan and energy costs have offset any giddiness about that.
How do the economic conditions feel to you? Will you be able to take advantage of the deals this year or are you going to hold off for a while until you feel better about that tepid 401k?