The car market does seem to be experiencing a slowdown, and several factors are discouraging potential buyers. According to a recent study from iSeeCars, six mainstream models have become unaffordable for the average buyer as a consequence. Interestingly, there are indications that prices for used cars are showing signs of improvement nationwide.
What exactly does it mean for a car to be “affordable” according to this study? It’s defined by annual car payments that cost no more than 10 percent of a household’s annual income. The idealized income the study uses is based on typical loan rates and terms for 60 months in the case of new cars, and 48 months for used models. It expects a down payment of 10 percent for a new car and 20 percent for a used vehicle.
More: Car Buyers Get Some Relief As New Vehicles Prices Continue To Trend Downward In October
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With that out of the way, let’s chat about the six, mainstream new cars that are no longer considered “affordable” based on those specifics. They include the MINI Cooper Hardtop (1.2% above the affordability threshold), the Ford Bronco Sport (2.3% above), the Acura Integra (3% above), the VW Golf GTI (4.5%), the Hyundai Tucson Hybrid (8.1%), and the Toyota Prius Prime (10.5%). Extending the length of the loan term doesn’t fix the problem either as the total cost goes up.
New Cars That Are No Longer Affordable: Sept. 2023 vs. Oct. 2022
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“To keep the monthly payment below 10 percent of the average household income, a consumer would have to take out a 90-month (7.5-year) loan to afford the average price of a new car,” said the report. From some 350 models on sale in the USA, only 70 qualify as “affordable” by the average consumer. That’s just 20 percent of the available cars on the market. Thankfully, the same situation isn’t true in the used car market.
“With the unprecedented rise in interest rates over the past year we didn’t expect vehicle affordability to improve for any segment,” said iSeeCars Executive Analyst Karl Brauer.
“But used car prices have finally come off their highs and are starting to moderate after years of increasing. Electric vehicle prices have simply tumbled over the past year, improving affordability on both new and used models. This shift, plus the rise in median household income, has improved the situation for buyers and added 23 models to the used car affordability list compared to last October.”
The top five used cars under the affordability threshold include the Genesis G70 (8% below), the Alfa Romeo Stelvio (8.8%), the Volvo S60 (11.6%), the Chevrolet Blazer (12.9%), and the BMW i3 (16.9%). At least there are some deals out there to be had for those willing to look.
Used Cars That Have Become More Affordable: Sept. 2023 vs. Oct. 2022
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