Affordability Index

Point Predictive’s Affordability Risk Index analyzes the interrelationship between average car prices, loan amounts, and borrower risk factors such as income, car payments, and average loan terms to understand macro affordability across the industry.
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Point Predictive’s Affordability Risk Index analyzes the interrelationship between average car prices, loan amounts, and borrower risk factors such as income, car payments, and average loan terms to understand macro affordability across the industry.
Last Updated 02/06/24

Introduction

Point Predictive’s Affordability Risk Index analyzes the interrelationship between average car prices, loan amounts, and borrower risk factors such as income, credit, car payments, and average loan terms to understand macro affordability across the industry. Since 2017, affordability risk has been increasing for borrowers. Tightened inventory, increasing vehicle values, and inflation pushed affordability to its lowest point recorded in 2022. In November 2022, the affordability risk index peaked at 152% as car prices increased dramatically. As affordability risk rises, we believe that fraud risk also increases since consumers and dealerships may be forced to stretch the truth to get their loans approved and funded. A good example of that is income related misrepresentation. As the average car payment rises, borrowers may need to materially inflate their income to afford those loans.

How was the Affordability Risk Index developed, and what criteria were considered in its creation?

The Affordability index was developed using historical data from 2017 through 2023. The data, from Point Predictive’s proprietary data repository, includes over 27 billion data points aggregated across 78 million consumers and 157 million applications for auto loans. The affordability index uses underlying application and consumer data to determine the average affordability of new and used cars across the industry.

Can you elaborate on the data sources and analysis methods used to compile the index?

The index was created using Point Predictive’s proprietary data which includes loan applications from 2017 through 2023. The data consist of auto applications. We collect approximately 85 fields of information on every application including demographics, loan information, vehicle information, sales information, dealership information and loan performance data.

How frequently is the index updated?

Currently the index is updated quarterly and published online.

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