Auto affordability improves, loan rates at an all-time low

The price of a new car may be more manageable for American families, according to a study by Comerica Bank. Consumer spending on cars declined 3 percent at the end of 2010, with the average buyer paying $700 less for a new car. Buying and financing a new car took up 23.2 weeks of median family income in the fourth quarter, the study found. Generally, consumers opted for less expensive cars, said Dana Johnson, the bank's chief economist. The current low prices for cars may not last long, he warned, and interest rates may soon be on the rise. At the moment, interest rates on new-car loans are at a historic low, The Columbus Dispatch reports. The average new-car loan interest rate sunk to 4.2 percent in December, according to recordkeeper Edmunds.com, the lowest in nine years. That figure includes additional savings from automakers, making a car purchase even more manageable for consumers. Major banks such as JP Morgan Chase and Bank of America also offer auto loans, but their rates are typically higher than those supplied by automakers.