Photo: Chevrolet
In 2005, the median household income in the United States of America sat at $56,058. These days, we’re a few grand down on that number. Despite this trend, new car prices are continuously going upward, making it harder for average people like you and me to buy a new car compared how it was merely a decade ago.
According to a study conducted by the peeps at Bankrate.com, the average price of a new car or light truck these days is $33,865. That, my fellow reader, is just about 60 percent of the median household income in the land of the free. For comparison’s sake, a 2016 Mercedes-Benz CLA Coupe starts from $32,975. Clearly, the way things are at the present moment force many of us to make an awfully tough decision. As in "Should I buy new or used?"
The thing is, cars can be more affordable in particular cities for the average mortal. The consumer financial services company put together a so-called car affordability chart by combining median incomes from U.S. census data and factoring in various costs. Bankrate found out that San Jose is right there at the top. The median income for the people living in the heart of Silicon Valley is $87,210, while the “affordable price” for a car sits at $32,855.
In low-income places such as the once vibrant Detroit Motor City, on the other hand, things are grim. With a median income of $25,769, the “affordable price” for a car in Detroit is $6,174. This is a bit worrying if you ask me, especially if you consider that the cheapest new car in the United States of America starts from $11,990. Rochester, New York, is the second to last, with a median income of $29,527 and an affordable price of $7,391.
Bankrate made its calculations on the 20-4-10 rule. In plain English, that’s 20 percent down payment, finance for a maximum of four years, and combined costs of the payment and insurance at less than 10 percent of the monthly income. All in all, things are not as dire as they seem to be at first glance. As long as the car is not a jalopy, it’s smarter to buy used anyway, right?
The thing is, cars can be more affordable in particular cities for the average mortal. The consumer financial services company put together a so-called car affordability chart by combining median incomes from U.S. census data and factoring in various costs. Bankrate found out that San Jose is right there at the top. The median income for the people living in the heart of Silicon Valley is $87,210, while the “affordable price” for a car sits at $32,855.
In low-income places such as the once vibrant Detroit Motor City, on the other hand, things are grim. With a median income of $25,769, the “affordable price” for a car in Detroit is $6,174. This is a bit worrying if you ask me, especially if you consider that the cheapest new car in the United States of America starts from $11,990. Rochester, New York, is the second to last, with a median income of $29,527 and an affordable price of $7,391.
Bankrate made its calculations on the 20-4-10 rule. In plain English, that’s 20 percent down payment, finance for a maximum of four years, and combined costs of the payment and insurance at less than 10 percent of the monthly income. All in all, things are not as dire as they seem to be at first glance. As long as the car is not a jalopy, it’s smarter to buy used anyway, right?
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