Cost of a vehicle at all-time low on clarkhoward.com

CLARKONOMICS: The Vehicle Affordability Index now shows that cars are the most affordable they've been since Jimmy Carter was president.

That's partly because of the intense competition in the car market that makes new vehicles a real deal at this point.

To arrive at this finding, researchers took the average income and figured out how many weeks you'd have to work to equal the average cost of a vehicle. The result? 23 weeks of work.

But here's the disturbing news: We're snatching defeat from the jaws of victory. First off, the average length of a loan is now 63 months, which is way too long. Second, repossessions have skyrocketed at all levels of car purchases -- partly because of the economic downturn.

42 months is the longest auto loan you should ever take out, according to Clark. If you can't afford the payment on a 42-month loan, then you need to buy a cheaper car. Paying cash upfront for a vehicle is always a good idea too.

Meanwhile, the price of used vehicles is down because there's too much supply. CarMax is among the major used-car sellers that's really taken it on the chin. So in addition to the great deals on new vehicles, there's never been a better time to buy a used car either. As always, remember to get a mechanic to carefully vet any used car before you actually buy it.

In related news, Clark recently read that an SUV purchased today will be worth a mere 30 cents on the dollar in 36 months. That's food for thought!

What others are saying

Vehicle cost
Using averages can get you in trouble. A little 'fuzzy math' indicates that an income of $1,000 per week ($52,000/year) yields a 'average car' costing $23,000. Seems to me most new vehicles(econo boxes excepted) cost more that this and by the way, Who makes 52,000 dollars a year?
By Rrick @ 08/14/08 04:09:44 PMreport abuse
clarks right
the fees associated with a car loan add up, even 0% interest ploys have financing charges, read the fine print instead of interest they charge you a financing fee of like $120 per month per 10,000 owed, they get you anyway they can and interest on standard car loans top 5% adding thousands to the price..the longer the loan the more interest they get....I always pay cash, they hate me...it takes longer to take cash than to sign me up for credit at the last dealership tyhey were so unused to it.... and they don't make crap in hidden fees.
By Dave @ 08/14/08 03:35:42 PMreport abuse
Car loan term
Why do you suggest that 42 months is the longest term one should choose for a car loan? With low interest rates on new cars, some as low as 0%, a buyer would be foolish to tie up cash in a car. Investing the cash in a money market or CD would provide the needed capital to make the payments, and the interest earned would exceed the interest paid.
By Chris @ 08/14/08 02:59:17 PMreport abuse

Vehicle cost

Using averages can get you in trouble. A little 'fuzzy math' indicates that an income of $1,000 per week ($52,000/year) yields a 'average car' costing $23,000. Seems to me most new vehicles(econo boxes excepted) cost more that this and by the way, Who makes 52,000 dollars a year?

By Rrick @ 08/14/08 04:09:44 PMreport abuse

clarks right

the fees associated with a car loan add up, even 0% interest ploys have financing charges, read the fine print instead of interest they charge you a financing fee of like $120 per month per 10,000 owed, they get you anyway they can and interest on standard car loans top 5% adding thousands to the price..the longer the loan the more interest they get....I always pay cash, they hate me...it takes longer to take cash than to sign me up for credit at the last dealership tyhey were so unused to it.... and they don't make crap in hidden fees.

By Dave @ 08/14/08 03:35:42 PMreport abuse

Car loan term

Why do you suggest that 42 months is the longest term one should choose for a car loan? With low interest rates on new cars, some as low as 0%, a buyer would be foolish to tie up cash in a car. Investing the cash in a money market or CD would provide the needed capital to make the payments, and the interest earned would exceed the interest paid.

By Chris @ 08/14/08 02:59:17 PMreport abuse

Listen Live:

Clark On Demand:

Clark's Advice:

Consumer Action Center:

Quick Links:

Clark Media:

Call The Show:

Aug 13, 2008 -- Cost of a vehicle at all-time low

What others are saying