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Report details what can be considered affordable car payments in metro areasPosted On Wed, February 27, 2013
A new analysis indicates that many Americans may not have the financial means with which to purchase a new car, especially if they live in a major metropolitan region.
According to a study conducted by financial resource outlet Interest.com, a median-income household has the financial means to purchase a new car in approximately two dozen major metropolitan areas, including Washington, D.C., San Francisco, Boston, Baltimore and Minneapolis.
The study also showed what's considered an affordable purchase price based on the cost of living in the various cities. For example, in Boston, a reasonably priced vehicle is no higher than $26,025 and median-income households should put no more than $507 per month toward paying off the loan.
Mike Sante, managing editor of Interest.com, noted that all too often, Americans devote too much of their earnings to car payments, failing to take into account other vehicle costs like auto insurance rates.
"What this research indicates, more than anything, is that a lot of Americans are spending too much money on their cars," said Sante.
He added that buyers are capable of spending less, however, as car costs are "one of the most controllable parts of a household budget."
A separate analysis suggests that buyers are handling their car payments well. According to credit reporting agency TransUnion, the national auto loan delinquency rate in 2012's fourth quarter was 0.41 percent - a near all-time low. However, the rate increased slightly from the previous quarter, when the rate was at 0.38 percent. Nearly two dozen states saw delinquencies diminish when contrasting the third and fourth quarters, including Idaho, Maine, Vermont and Louisiana.
TransUnion defines delinquencies as payments that are more than 60 days past due.
Feedback or questions? Email the editor here.