Study Ranks Owners' Ability to Afford Their Cars by City

DrivingInBigCity

Can you afford your car? Obviously, the answer to that question is more complicated than "yes" or "no." But far more often than you might imagine, it's the latter, according to a study of the nation's 25 largest metropolitan areas by Interest.com. Now you can gauge your own financial solvency as it relates to your household vehicles — or just use the info to justify your condescending smirk/head-shake combo as your neighbor drives by in his new luxury sedan.

2013 Year-End Sales Preview

"Too many families are spending way too much on new cars and trucks," Interest.com Managing Editor Mike Sante said in a statement. "Just because you can manage the monthly payment doesn't mean you should let a $30,000 or $40,000 ride gobble up such a huge share of your paycheck. You can get a great car for much less and use the savings to invest in yourself."

The study calculated how much a household can afford to spend on a car or light-duty truck using the so-called 20/4/10 rule: a down payment of at least 20 percent; a financing term of no more than 48 months; and principal, interest and insurance not exceeding 10 percent of a household's gross income. Washington, D.C., San Francisco and Boston led the charge in ability to afford vehicles, while Miami and Tampa, Fla., car owners were at the bottom of the list. The nation's three largest cities were clustered toward the middle of the list of 25, with New York at No. 10, Chicago at No. 12 and Los Angeles at No. 14.

The rankings come as luxury vehicles continue to enjoy a surge in popularity. For the first 11 months of 2013, the top three luxury brands (BMW, Lexus and Mercedes-Benz) outpaced the overall industry's 8.3 percent sales growth by nearly 4 percent. Translation: More people are buying more expensive cars. But can they afford them?

In D.C., according to Interest.com, the median household can afford a $32,531 vehicle, which researchers calculate to carry a $641 monthly payment. Chicago car buyers, meanwhile, can afford a $21,409 vehicle with a monthly payment of $434. And in Tampa, Fla., the median-income household can keep up with the $280 monthly payment on a $14,209 car.

For comparison, according to Cars.com's Auto Loan Calculator, the monthly payment on the top-selling sedan in the U.S., the Toyota Camry, is $417.42 on a starting price of $23,045; the BMW 3 Series, a perennially best-selling luxury sedan, costs $692.38 a month on a $38,225 starting price; and the Honda Civic compact sedan costs $343.79 a month on an $18,980 starting price. Prices do not include insurance, and assume a 48-month loan term and the current national average interest rate of 4.14 percent, according to Bankrate.com.

Find where people in your city rank (listed most to least able to afford their cars) below, followed by the Interest.com-calculated affordable purchase price and maximum monthly payment:

  • 1. Washington, D.C.: $32,531; $641
  • 2. San Francisco: $28,009; $563
  • 3. Boston: $26,669; $520
  • 4. Minneapolis: $24,846; $494
  • 5. Baltimore: $24,591; $479
  • 6. Seattle: $23,600; $480
  • 7. Portland, Ore.: $22,905; $415
  • 8. Denver: $22,775; $452
  • 9. San Diego: $22,175; $442
  • 10. New York City: $21,907; $441
  • 11. Philadelphia: $21,775; $434
  • 12. Chicago: $21,409; $434
  • 13. Dallas: $20,731; $405
  • 14. Los Angeles: $20,637; $416
  • 15. Sacramento: $20,554; $412
  • 16. Houston: $20,271; $396
  • 17. Milwaukee: $20,013; $388
  • 18. Atlanta: $20,000; $393
  • 19. St. Louis: $19,016; $379
  • 20. San Antonio: $18,376; $359
  • 21. Phoenix: $18,199; $364
  • 22. Pittsburgh: $17,965; $354
  • 23. Detroit: $17,352; $338
  • 24. Miami: $15,174; $299
  • 25. Tampa: $14,209; $280

Laura Eisenberg/iStock/Thinkstock

Comments 

Trabzon Oto Kiralama very interesting.

wain

USA the land of easy credit.

Mike / CTMechE

I'm still stunned at what people spend on cars, and have been for years. We're fortunate enough to have a pretty good household income, more than twice the median household income, but I've never spent more than $20k on a car.
And don't get me wrong - I really like cars, and I'd love to buy a nicer one... but while we could certainly make the payments on a much more expensive car, it's not a prudent decision to do so.

I think people's definitions of "affordability" have largely deteriorated, and merely comes down to whether or not they'll let you sign your name and drive away.

I pity to think what these people are doing for retirement savings. I'm pretty sure it's nothing.

Post a Comment 

Please remember a few rules before posting comments:

  • If you don't want people to see your email address, simply type in the URL of your favorite website or leave the field empty.
  • Do not mention specific car dealers by name. Feel free to mention your city, state and brand.
  • Try to be civil to your fellow blog readers. This blog is not a fan or enthusiast forum, it is meant to help people during the car-buying process and during the time between purchases, so shoppers can keep a pulse on the market.
  • Stay on topic. We want to hear your opinions and thoughts, but please only comment about the specified topic in the blog post.
view posting rules

If you have a TypeKey or TypePad account, please Sign In

Search Results

KickingTires Search Results for

Search Kicking Tires

KickingTires iPhone App
Ask.cars.com