New-vehicle affordability took a hit in April, reversing recent gains and marking the worst level of the year, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. The number of median weeks of income needed to purchase an average new vehicle jumped to 37.3 weeks, up from the revised 36.3 weeks in March, as rising prices and shrinking incentives outpaced income growth.
The average new-vehicle monthly payment rose 3% to $753, the highest level recorded since December. Meanwhile, the average new-vehicle price increased 2.5% month-over-month, as reported by Kelley Blue Book. Although income levels remained strong and loan rates improved year-over-year, these factors were not enough to offset the combined impact of higher vehicle prices and reduced discounts.
The average auto loan interest rate in April edged up slightly to 9.77%, an increase of four basis points (BPs) from March but still 92 BPs below last year’s levels. While this reflects a more favorable lending environment than a year ago, elevated transaction prices and weakening incentives continue to challenge affordability.
Compared to April 2024, affordability was better overall, requiring 4.6% fewer weeks of income to purchase a vehicle. However, this marginal year-over-year improvement came amid lower prices and higher interest rates in the prior year, making the current setback more pronounced against the backdrop of recent recovery trends.
The April figures follow a steady improvement in affordability through the early months of 2025, signaling a concerning shift as the market responds to global economic pressures, including ongoing tariff impacts that have affected both pricing and consumer confidence.
