LOS ANGELES, Dec. 14, 2016 /PRNewswire/ -- Requisite Press, LLC reported today a November 2016 Auto Buyer's Affordability Index (ABAI) of 58.9, indicating that a prudent, median-income household can afford 58.9 percent of the light-vehicle average transaction price (ATP). In a recent survey, Requisite Press found that three out of four U.S. consumers believe that new vehicles are unaffordable. This comes as income growth is slowing and affordability gains are minimal. However, car buyers can individually take action to improve the affordability of a new-vehicle purchase. Requisite Press recommends four key money-saving steps—obtain preapproved financing, sell a trade-in separately, avoid add-ons, and obtain a market price.
Requisite Press recently surveyed 1001 U.S. consumers* and found that 74.6 percent consider new cars and trucks to be generally unaffordable. This follows a year of slowing income growth and minimal affordability gains—the ABAI has stalled at around 59 since reaching that level in February.
"Income growth has moderated, new-vehicle sales are plateauing, and affordability is clearly an issue," said Phil Kelton (@Phil_Kelton), President of Requisite Press. "It's difficult to predict when and how automakers will address this issue, but car buyers can individually take action today to improve the affordability of a new-vehicle purchase."
Requisite Press recommends four key ways to reduce the total cost of a new-vehicle purchase:
- Obtain preapproved financing. Financing costs can add thousands of dollars to a vehicle purchase. Car buyers can ensure a competitive financing environment and avoid unnecessary costs by obtaining a preapproved loan from their bank or credit union.
- Sell a trade-in separately. When a purchase is combined with a trade-in, a seemingly great price quote may be offset by a mediocre trade-in offer. Separating the transactions ensures that the price quote can be easily compared to quotes from competing dealers.
- Avoid add-ons. Add-ons, such as a vehicle service contract, are costly and rarely make financial sense. Consumers are better served by using savings to pay for both planned and unplanned maintenance.
- Obtain a market price. There are internet prices, "fair" prices, and better than the neighbor's price prices—all higher than the market price. The best price—a market price—is obtained through robust competition. This can be efficiently achieved with negotiation-free car buying.
Details of these money-saving tips, and much more, is included in a newly released e-book—The 15-Minute Guide to Negotiation-Free New Car Buying: Simply Save More and Stress Less.
The e-book is available at: https://carswithease.com.
The November 2016 ABAI of 58.9 is based on a median household income of $57,929 a light-vehicle average transaction price of $31,473, and adherence to the 20-4-10 auto financing rule. This equates to an affordable monthly payment of $367 and price of $18,535.
Additional background, information, and analysis, including survey details, is available at the following location:
*The survey was written by Requisite Press, LLC and conducted using Google Consumer Surveys, December 2016.
Requisite Press, LLC, founded in 2012, publishes consumer-focused car-buying information and resources. In addition to publishing the monthly Auto Buyer's Affordability Index and car-buying guidebooks, Requisite Press also provides AffordCheck (SM), a free, online affordability calculator based on the 20-4-10 auto financing rule.
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SOURCE Requisite Press, LLC