The Phoenix metro area ranks 21st out of 25 major cities in a new car affordability study conducted by Interest.com.
Accounting for the region's median income and car insurance costs, Interest.com determined that typical Phoenix area households can afford to spend up to $17,243 on a car. The average new car, however, costs $30,550.
"What this research indicates, more than anything, is that a lot of Americans are spending too much money on their cars," Interest.com Managing Editor Mike Sante.
When calculating how much a household can afford to spend on a car or light truck, Interest.com considered three key factors that are commonly referred to as the "20/4/10" rule. That is: a down payment of at least 20 percent; financing lasting no longer than four years; and principal, interest and insurance not exceeding 10 percent of a household's gross income.
Interest.com recommends that median-income households spend no more than the following amounts on vehicle payments (principal and interest) in total and each month.
The average price of a new car or light truck in 2012 was $30,550, according to TrueCar. That equates to a monthly payment of about $601.
Monday, September 15 2014 11:36 PM EDT2014-09-16 03:36:59 GMT
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