If you're a new car shopper, we have good news and bad news. How's about we start with the bad news first?
Car prices are creeping up faster than household income -- and they have been since the Great Recession. Market research firm Requisite Press says that car prices rose 8.9 percent between 2009 and 2013. However, the U.S. Bureau of Economic Analysis and the Census Bureau say that median household income grew by just 4 percent during that same period.
What does that mean in lump sums? As of July, median household income was $53,891. Meanwhile, the cost of an average new car was $30,210. Taking disposable income into account, the average consumer can afford just 53.5 percent of a new car.
Consider this: if you were an average consumer, and you put down 20 percent of the price of your new car, you'd be left with a loan of $24,168. Spread out over four years (the maximum recommended length of a car loan), at today's average interest rate of 4.14 percent, you'd shell out a hefty $547.21 per month for 48 months. Ouch
So, what's the good news?
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Thanks to the internet, consumers have many more ways to nab great deals. You can do that, for example, right here at The Car Connection by visiting our "New Cars" section, identifying the make and model you want, and hitting the "Request a quote" button.
However, Requisite Press' Phil Kelton also suggests emailing dealerships directly, asking them for their best possible price on your vehicle of choice. If you live in a metro area with a number of nearby dealerships, this approach will allow you to request multiple quotes in a matter of minutes. It's far easier than schlepping from showroom to showroom, and you'll avoid the haggling that makes many of us want to throw up our hands and take buses for the rest of our lives.
And if you're a serious shopper, don't forget to engage lenders, too. Use a site like Bankrate to see what loan terms are available, then visit Lending Tree, CarsDirect, or a similar site to solicit offers from multiple banks. If you go to a dealership without being pre-approved for a loan, you're putting yourself at the dealership's mercy. Its loan officer may be able to offer a decent rate, but if you have nothing to compare it to, you'll never know.