has taken a look at the 25 largest metropolitan areas in the US to determine which median-income households in those areas can afford to purchase a new car. As it turns out, only those living in Washington, D.C. can realistically swing the payment on an average-priced model. In 2012, new cars and light trucks carried a median MSRP of $30,550, and used the 20/4/10 rule to examine what exactly is affordable in each area.

The rule states that a buyer should be able to offer a down payment of at least 20 percent, incur financing for no more than four years and endure a principal, interest and insurance totaling up to no more than 10 percent of household income. That works out to a monthly payment of $601. Households with an average income in Washington, D.C. can afford a payment of up to $628, while the next closest city, San Francisco, can only afford $537 per month. You can pick through the cryptic press release below for more information.
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Median-Income Household Can Only Afford Average-Priced New Car in One of the 25 Largest U.S. Metros

CHICAGO, Feb. 26, 2013 /PRNewswire/ -- A median-income household can only afford the average-priced new car or light truck in one of the 25 largest metropolitan areas in the U.S. (Washington, D.C.), according to research released today by, a Bankrate (NYSE: RATE) company. published a related list of how much a median-income household in each metro area can afford to spend on a vehicle.

"What this research indicates, more than anything, is that a lot of Americans are spending too much money on their cars," said Mike Sante, managing editor of "Car costs are one of the most controllable parts of a household's budget. For example, if you live in New York City or San Francisco, you're probably going to have to pay a lot for housing, but you don't have to pay a lot for a car. You're better off driving something more affordable and saving or investing the difference."

When calculating how much a household can afford to spend on a car or light truck, considered three key factors that are commonly referred to as the "20/4/10" rule. That is: a down payment of at least 20%; financing lasting no longer than four years; and principal, interest and insurance not exceeding 10% of a household's gross income. recommends that median-income households spend no more than the following amounts on vehicle payments (principal and interest) in total and each month. For comparative purposes, 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 approximately $601.

Metro Area
Affordable Purchase Price
Maximum Monthly Payment

1. Washington, D.C.

2. San Francisco

3. Boston

4. Baltimore

5. Minneapolis

6. Seattle

7. Portland, Ore.

8. Denver

9. San Diego

10. New York City

11. Philadelphia

12. Chicago

13. Los Angeles

14. Sacramento

15. Dallas

16. Houston

17. Milwaukee

18. Atlanta

19. St. Louis

20. Pittsburgh

21. Phoenix

22. San Antonio

23. Detroit

24. Miami

25. Tampa

More information is available at:

For each metro area, calculated 10% of the monthly median gross household income in that area and subtracted the average monthly insurance premium in that area to determine the maximum amount that the median-income household should spend on monthly car payments (principal and interest). used its Auto Loan Calculator to calculate how much the median-income household can afford to borrow. Assumptions: 20% down payment, 48-month loan, national average interest rate, roll the sales tax into the amount being financed. The calculator is available at:

Median incomes for each metro area were pulled from the U.S. Census Bureau's 2011 "American Community Survey" (the latest year for which data is available).

Insurance costs are 2010 statewide averages from the National Association of Insurance Commissioners (the latest year for which data is available).

TrueCar provided the average national cost for new cars or light trucks in 2012.

The average rate for a 48-month new car loan came from (January 23, 2013).

Sales tax rates were obtained from local governments and car dealers.


Since it was created in 1994, has been helping consumers make smart financial decisions.'s stories, calculators and interest rate tables also appear on the websites of more than 100 newspapers in 31 states, including the Los Angeles Times, the Chicago Tribune and the Dallas Morning News. is owned by Bankrate, Inc., which is among the largest and most trusted providers of personal finance advice and information on the Web.

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