Can you afford the average car ? Probably not , study says

Can you afford the average car ? Probably not , study says

AUTOCOM CDP Pro Most Americans spend more than they can afford a new car, according to a study released this week by Interest.com , a subsidiary of Bankrate , Inc. Analysts have examined median income insurance , rates and taxes in 25 cities to determine the affordability of a new vehicle based on the region. They compared these figures with the average price of Kelley Blue Book a new car , truck or SUV last year , which was $ 32,086 .

Washington , DC is the only city where households can afford to pay more than the price of the average new car, $ 32,531 , the study finds . Tampa is ranked last , with the support of average income can pay $ 14,209 on a new car . This is more or less the difference between buying a Hyundai Accent and Cadillac ATS . In the middle are cities like Chicago, where the average person can afford to pay $ 21.409 for a new vehicle .

VAG-Com The affordability study used an interest rate of 4.16 percent, the average rate for a new car loan four years earlier this month . While many car buyers opt for lower monthly payments and a loan more , it can be detrimental in the long term. Analysts advocate a " 20/04/10 " rule that buyers make a down payment of at least 20 per cent of finance for more than four years and do not pay more than 10 percent of their total monthly income before taxes on vehicle expenses , including car payments and insurance.

How can you find a reasonable monthly payment? Interest.com told calculate 10 percent of your monthly income before taxes and subtract your monthly insurance premium. The result is a car payment that is affordable for you. To save money, you can search for car deals , including zero percent financing offers low interest rate auto , as well as cash back incentives .

MaxiVideo MV101 Consumer Reports also recommends that at least 20 percent on a new car, which may include the value of a vehicle exchange . The magazine says that you should take into account all of your debts , including mortgage payments or rent, credit cards and other loans. Combined with your car payment , these costs should not exceed 36 percent of your income before taxes.