The Average American can’t Afford a New Car
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