New Car Affordability Slightly Better

According to the Cox Automotive/Moody’s Analytics Affordability Index, the average monthly new-vehicle payment fell about 2% to $765 in February 2023.  While this is the lowest index level since October 2022, affordability remains worse than a year earlier and is still well above what the average U.S household can afford.  Cox Chief Economist Jonathan Smoke said that the average household can afford just $400 of vehicle loan payment per month.

Cox reported that the increased affordability resulted from growing consumer incomes and a lowered average loan rate.  Median income increased by 0.3% and the average new-vehicle loan interest rate fell to 9.2%.