The South Florida metro area is the worst for buying new cars and they aren’t the only ones
Car shopping is already a long, tedious process. But if you can’t afford a new car, it’ll be an even bigger (and more frequent) hardship.
A new Bankrate report says most American households can’t afford new cars in all but one of the largest metro areas in the country: Washington, D.C.
Bankrate studied the cost of new cars, insurance, taxes and household income to see if and where residents have enough money to buy cars. Aside from the outlier District of Columbia, there isn’t a major city in the United States that’s affordable. And some cities are worse than others. Take a look…
While Washington, D.C. was the most affordable, they were also technically the only affordable city. The margin between “affordable” and the average price is just below 12 percent. San Francisco was next in line, where the margin was -2.93 percent. From there, it only gets worse.
Miami is the worst place for residents to buy new cars, with the margin being almost -60 percent. This means Miamians can afford to buy less than half of the average new car price, or more than $13,000. For measure, the average cost of a new car is $35,368.
After Miami, Detroit, Tampa, Orlando, and San Antonio round out the five worst metros for car affordability.
While D.C. is the only place in the country where residents can technically afford cars, some spots around the U.S. are still better than others. Rounding out the top five best metros for car affordability are: San Francisco, Boston, Seattle, and Minneapolis-St. Paul.
Bankrate determined the costs by using the 20/4/10 rule: “a 20 percent down payment, a four-year loan and principal/interest/insurance payments comprising 10 percent of a household’s gross income.”
That means if you’re buying a new car just about anywhere in the major cities across the country, you can’t really afford it. Solution? Buy used.
Is Florida really that bad?
Car sales in the Sunshine State may not be so great for residents, but that doesn’t mean visitors will have trouble getting one.
If you live in another state, fly to Florida, buy a car and drive it back, it’ll still cost you less than if you bought a car at home, according to another recent study. While this isn’t the case for all cities across the U.S., it is for some. For example, Albany residents who fly into Miami will save $1,375 on a new car, while Grand Rapids to Tampa will save Michiganders $1,363. If you fly from Memphis to Orlando, you can save an average of $1,135. Yes, that includes gas!
Bankrate reports that both new and used cars have gone up 25-35 percent in the last 35 years, making it difficult for homes in big metro areas to afford to buy a car. They estimate national averages around $19,200 for used cars — a price tag even eight out of the top 25 metro areas can’t afford.
Since many consumers can’t afford new cars based on the 20/4/10 rule, they’re still making it work somehow. Bankrate says three-in-four new car loans agree to terms longer than five years. Some are even written for eight years — twice as long as the typical car loan. That’s why Debt.com CEO Howard Dvorkin fears an auto loan bubble.
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Article last modified on September 13, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Need a New Car? Hope You Don’t Live in Miami - AMP.