"The main point of this research is to illustrate how Americans are having to overextend themselves to pay for a new car at today's prices," says Bankrate analyst Claes Bell. "Low- and middle-income households are having to stretch loan terms to six or more years and/or spend huge percentages of their paychecks to afford reliable transportation, and it's very difficult to get off that hamster wheel of debt once you're on it."
Even today's average used-car price of around $19,200 would be hard for households in eight of the biggest metro areas.
"In the past 35 years, the cost of a new car has gone up 35 percent, a used car is up 25 percent, and at the same time, the median household income is only up 3 percent," Michelle Krebs, a senior analyst for Autotrader, told Bankrate.
As Bankrate's Bell pointed out, one way consumers bridge the affordability gap is with longer-term car loans. These days, three quarters of new-car loans are written for longer than five years, and the number of loans with terms as long eight years is on the rise, according to Experian. And of course, there's leasing."In the past 35 years, the cost of a new car has gone up 35 percent, a used car is up 25 percent, and at the same time, the median household income is only up 3 percent," Michelle Krebs, a senior analyst for Autotrader, told Bankrate.
(AutoBlog.com)
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