The Average American can’t Afford a New Car

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The Average American can’t Afford a New Car
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The average American household can’t afford to purchase an average-priced new car according to research from Interest.com.

Out of 25 cities studied, only median-income citizens in Washington D.C. can afford an average new car at $31,940.

“What this research indicates, more than anything, is that a lot of Americans are spending too much money on their cars,” Mike Sante, managing editor of Interest.com said.

To come up with this information, Interest.com found the average household gross income of 25 major metropolitan areas in the U.S.

Then, based on a formula of a 20 percent down payment, financing lasting no longer than four years, and principal, interest and insurance not exceeding ten percent of a household’s overall income, discovered how many average Americans can afford to buy a new car,the average price of which was $30,550 in 2012, according to True Car. At that price, the monthly payment would be approximately $601.

On the bottom of the list sits Tampa, Fla., where the average citizen can only afford a $282 monthly payment and a $14, 516 car, quite a ways off from the $601 required. That is just enough to cover a base model subcompact, and not much more. Coming up in the middle is Chicago, where the average household can afford to buy a $20,616 car, with a maximum monthly payment of $417. That’s enough to buy a Honda Civic, and not much more.

See below for a full breakdown of how much each city can afford to spend on a new car:

Washington, D.C. Affordable Purchase Price: $31,940 Maximum Monthly Payment: $628

San Francisco Affordable Purchase Price: $26,786 Maximum Monthly Payment: $537

Boston Affordable Purchase Price: $26,025 Maximum Monthly Payment: $507

Baltimore Affordable Purchase Price: $24,079 Maximum Monthly Payment: $468

Minneapolis Affordable Purchase Price: $24,042 Maximum Monthly Payment: $470

Seattle Affordable Purchase Price: $22,963 Maximum Monthly Payment: $466

Portland Affordable Purchase Price: $21,985 Maximum Monthly Payment: $397

Denver Affordable Purchase Price: $21,835 Maximum Monthly Payment: $432

San Diego Affordable Purchase Price: $21,781 Maximum Monthly Payment: $433

New York City Affordable Purchase Price: $21,464 Maximum Monthly Payment: $431

Philadelphia Affordable Purchase Price: $21,069 Maximum Monthly Payment: $419

Chicago Affordable Purchase Price: $20,616 Maximum Monthly Payment: $417

Los Angeles Affordable Purchase Price: $20,385 Maximum Monthly Payment: $410

Sacramento Affordable Purchase Price: $19,965 Maximum Monthly Payment: $397

Dallas Affordable Purchase Price: $19,959 Maximum Monthly Payment: $389

Houston Affordable Purchase Price: $19,811 Maximum Monthly Payment: $386

Milwaukee Affordable Purchase Price: $19,297 Maximum Monthly Payment: $373

Atlanta Affordable Purchase Price: $19,122 Maximum Monthly Payment: $376

St. Louis Affordable Purchase Price: $18,550 Maximum Monthly Payment: $371

Pittsburgh Affordable Purchase Price: $17,298 Maximum Monthly Payment: $340

Phoenix Affordable Purchase Price: $17,243 Maximum Monthly Payment: $348

San Antonio Affordable Purchase Price: $17,137 Maximum Monthly Payment: $334

Detroit Affordable Purchase Price: $17,093 Maximum Monthly Payment: $332

Miami Affordable Purchase Price: $15,188 Maximum Monthly Payment: $295

Tampa Affordable Purchase Price: $14,516 Maximum Monthly Payment: $282

  • http://dbcooper.livejournal.com P.F. Bruns

    Wow! I live in Tampa, and I’m paying just above the average.

  • Chmeeee

    Wow, so you’re just basically using bad statistics to make an alarmist article?  You’re comparing the median income to the average car price; anybody could tell you that you need to use the median for both statistics for your math to have any validity.

    Also, your assumptions of a four year loan are also way out whack given that the average new car loan is five years, but I guess we’re not worried about the facts here.

  • John Smith

    On barely 28K a year, according to the 65% rule that means I can afford only a $15K new car, and that includes taxes, fees, license. What year is this, anyway? 1991? LOL. No freaken’ way. As long as gas is hovering at the comical $4.00 a gallon mark, there’s no way I’m going to even apply for credit to buy a car. It’s insane on my salary. 90% of new car applicants get denied anyway, last I heard. The price of new cars has passed my cost of living raises, and along with my food and housing costs, let those new cars sit on the lot unsold.

  • Midwest Confusion

    My family earsn 150K in the Midwest. I literally laugh when I look at new car prices. I just left a Ford Dealer and a nice truck is about 50,000. Who in the world buys this vehicle?? I am at the top of the food chain at my work place, and I would ot even considerate it. Wasnt Fords plan that the average worker could buy their products!! I guess thats out the window