Only Americans Who Live in One US City Can Afford New Cars

[TurboDan]

Pretty much...

http://www.washingtonpost.com/cars/can-you-really-afford-that-car-not-if-you-live-in-24-of-americas-25-biggest-cities/2013/02/28/1dfab520-81c5-11e2-a671-0307392de8de_story.html

Analysts at that website looked at the median gross income for families in each of those areas -- from Washington, D.C. to Tampa, Florida. They then applied what's know as the "20/4/10" rule, which says that the smartest way to purchase a vehicle is to (a) put down at least 20%, (b) finance the car for no longer than four years, and (c) pay no more for the loan and insurance than 10% of your gross monthly income.

They then determined the average price of a new car -- $30,550 in 2012 -- and the cost of financing 80% of that sum over 48 months. That works out to $601 per month, plus insurance, at current interest rates.

Based on that rationale, the site's analysts say that only residents of Washington, D.C. can really afford to purchase new cars. The average D.C. family could manage to spend $628 per month for a ride, plus insurance. Folks in the other 24 top cities? Not so much.

[Eye of the Tiger]

If I want to spend 60% of my gross income on a car payment, that is my damn business. The fuck can some dumbass newspaper tell me what I can "afford"?

[Rupert]

Using the average price is complete bollocks. Use the lowest price for a new car. That's roughly half the number given, with is roughly half the monthly payment given, which is $300/mo.

[TurboDan]

Using the average price is complete bollocks. Use the lowest price for a new car. That's roughly half the number given, with is roughly half the monthly payment given, which is $300/mo.

I pay less than that for the LR2 ($268/mo), but I bought 'er used. My mom bought her '12 VW Tiguan SEL new for like $36K-ish and has a per-month payment in the high $300s. In both cases, we had prepared to pay cash, but 0.9% financing lured us in.

It's nuts to see how people put $0 down on cars. Or on houses. I know a chick who put less down on a condo than I did on the LR2. 

[giant_mtb]

People love the "pay nothing now, pay it off later" concept.  It's stupidity.

[Morris Minor]

The point of the article is that the shining city on the hill is doing a good job of raking in tributes from the unwashed peasantry out in the shires.

[GoCougs]

I pay less than that for the LR2 ($268/mo), but I bought 'er used. My mom bought her '12 VW Tiguan SEL new for like $36K-ish and has a per-month payment in the high $300s. In both cases, we had prepared to pay cash, but 0.9% financing lured us in.

It's nuts to see how people put $0 down on cars. Or on houses. I know a chick who put less down on a condo than I did on the LR2. 

If you justify a car payment solely based upon 0.9% the size of the down payment is irrelevant.

[TurboDan]

If you justify a car payment solely based upon 0.9% the size of the down payment is irrelevant.

What am I justifying?

The gains on the investments I made (in ONE year) with the money I would have handed over to the car dealer far exceed the pittance I'll pay in interest on the auto loan.

[GoCougs]

What am I justifying?

The gains on the investments I made (in ONE year) with the money I would have handed over to the car dealer far exceed the pittance I'll pay in interest on the auto loan.

You are justifying having a car payment vs. paying cash.

[ChrisV]

The article is muisleading. They use MEDIAN incomes but AVERAGE prices. A few luxury vehciles and cars like the Veyron skew the AVREAGE up quite a bit, vs the MEDIAN. It's apples to oranges and  lot of people can afford the MEDIAN new car, which is much lower than $30k. No, the article is mixing it's numbers to come up with a more sensationalistic headline.

Also, who finances with 20% down and takes a 4 year loan? 5 year is the most common, and when the interest rates are so low, putting 20% down is a bit silly. OTOH, many peopel are trading in cars on a new car and so they are putting money down on a 5 year loan, making it even more affordable to buy the MEDIAN new mid size sedan or compact sedan.

[Laconian]

The article is muisleading. They use MEDIAN incomes but AVERAGE prices. A few luxury vehciles and cars like the Veyron skew the AVREAGE up quite a bit, vs the MEDIAN. It's apples to oranges and  lot of people can afford the MEDIAN new car, which is much lower than $30k. No, the article is mixing it's numbers to come up with a more sensationalistic headline.

Also, who finances with 20% down and takes a 4 year loan? 5 year is the most common, and when the interest rates are so low, putting 20% down is a bit silly. OTOH, many peopel are trading in cars on a new car and so they are putting money down on a 5 year loan, making it even more affordable to buy the MEDIAN new mid size sedan or compact sedan.

+juan

[TurboDan]

You are justifying having a car payment vs. paying cash.

"Justification" implies making an excuse for a poor decision. I did not make a poor decision. 

[MX793]

OTOH, many peopel are trading in cars on a new car and so they are putting money down on a 5 year loan, making it even more affordable to buy the MEDIAN new mid size sedan or compact sedan.

A lot of people trade in cars that they still owe money on (taking a 5 year loan but trading in after 3-4 years), making themselves only further in debt.

[AutobahnSHO]

A lot of people trade in cars that they still owe money on (taking a 5 year loan but trading in after 3-4 years), making themselves only further in debt.

I know someone that did that every 3 years for more than 10 years- they ended up rolling like $20k into the new car