Consumers buying less expensive cars even auto loan rate climb

The number of auto loans issued continues to improve and increase, but that has not motivated consumers to purchase more expensive cars, according to a report released by Comerica Bank on Wednesday. The Dallas-based bank found that the average price of a new car translated into 23.2 weeks of a median family income during the fourth quarter of 2010, which shaved 0.5 weeks off the length of time it took to pay off a vehicle. "Consumers continued to opt for less expensive cars in the fourth quarter, even as auto loan rates rose and the national recovery gradually reaccelerated," Dana Johnson, chief economist at Comerica Bank, said in a statement. "Looking ahead, affordability could erode as the cost of financing a new car increases due to rising interest rates. The report also found that consumers are spending an average of $700 less on their new cars, representing a 3 percent drop during Q4 2010. Meanwhile, the interest rates on new car financing inched upward at a 0.5 percent rate and the third quarter reading of that metric was corrected to show a 0.1 percent decline.