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.
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"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.