A revealing report was released over at Interest.com, detailing how the average new car price is out of the financial reach of most middle income households in America, with the exception of Washington, D.C..
In the nation’s capital, Kelley Blue Book placed that average car cost at right around $32,086 last year, which might equal a payment of around $633 a month under an average 48-month finance plan. Given the average income in D.C., most Washingtonians are able to make that payment without a problem.
But the short of it is, most median income Americans can’t afford these payments in proportion to their salaries. The numbers simply don’t add up. Here’s a few cities Interest.com listed, along with the amount of money the average buyer can afford to spend:
The conclusion to be drawn is that car buyers are either not informed about what they can/should be spending on a new car or truck…or that they don’t mind living beyond their means. From AOL Autos:
Experts say that, as a general rule, you shouldn’t spend more than 20 percent of your take-home pay on your car. To find out how much car you can actually afford, calculate that number and use a car affordability calculator, such as this one from Interest.com. This will give you a good idea of how much a car is going to cost each month based on interest rates, trade-ins,taxes and more. You can then compare the cost to your monthly budget.
But it would appear that across the nation, people aren’t following that rule of thumb.
What do you think? Is this a trend we should be worried about? Is the current lack of jobs and the trajectory of where all the good salaries are going concerning to you? Perhaps living beyond one’s means is the only way to relax in these stressful times. One can certainly understand why some people have adopted the “life is short” mantra during this tough economic era, so it’s hard to fault people for wanting to have a luxury item or two that they can’t actually afford. The real question is: when will we be prosperous enough as a nation so that one measly new vehicle IS within our reach? Sound off below.
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