Which U.S. City has the Worst Car Payments?
140 percent. That’s how much more car buyers in New Orleans, Louisiana, are spending above what financial experts recommend on their total car payment, according to a recent study from iSeeCars.com. The site studied 25 million vehicles for sale across 50 of the largest US metropolitan areas, comparing a variety of factors to figure out just how affordable buying a car in these areas can be. Somewhat unsurprisingly, it’s not very affordable. Is your city on the list? RELATED: Nissan's affordable Versa is the US' cheapest car
Following behind New Orleans, the ten worst cities for ideal car payments include Birmingham, Alabama (126 percent above); Riverside, California (117 percent); San Antonio, Texas (113 percent); as well as Houston, Fort Lauderdale, Dallas, Las Vegas, Oklahoma City and Atlanta.
While each of those areas sees consumers spending on average more than 100 percent above ideal total car payments, the average auto payments in New York City and Washington D.C. are just 12 and 14 percent above the finance experts’ advised levels, respectively, marking them the only two major metro areas that came close to meeting an ideal situation.
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Here’s how the numbers were crunched. After iSeeCars calculated what consumers in each city pay for a car in reality, the ‘ideal’ car payment scenario was calculated using median household income data and a popular 20-4-10 auto financing rule (20 percent down payment, four years of financing, and no more than 10 percent of household income spent).
While cities with the lowest median household income, such as New Orleans and Birmingham, scored poorly on the list, cities like Houston – with an average $10,000 more in income per household – still saw consumers spending $26,202 more on car payments than financially ideal.
“The households in these regions that are at or below the median income are at a major disadvantage when it comes to buying a used car and staying ahead of the curve financially," said Phong Ly, CEO of iSeeCars. "Getting as close to the ideal situation as possible makes it more likely that Americans will be able to save money, or put that money toward paying down other debt."
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Photo Credit: Every Car Listed