Wednesday, April 25, 2018
Business

Study: it's tougher to afford a new car in Tampa Bay than any other big metro area

You're not alone if the cost of buying a new car is driving you crazy. • The Tampa Bay area ranks last out of 25 major cities in a new car affordability study conducted by Interest.com, part of the personal finance advisory firm Bankrate Inc. Miami was close behind at No. 24.

Comparing median income here to car insurance costs, Interest.com determined that Tampa area residents can afford to spend up to $282 a month on a car. The average new car, however, costs about $600 per month after adding in costs like a down payment, financing and insurance.

Another way to look at it: Tampa Bay drivers, on average, could afford spending $14,516 on a vehicle, but the average price of a new car or light truck last year was $30,550, according to TrueCar. The study did not compare leasing costs.

To calculate how much a household could afford to spend on buying a car, Interest.com said it considered three factors that are commonly referred to as the "20/4/10" rule: a down payment of at least 20 percent; financing no longer than four years; and principal, interest and insurance not exceeding 10 percent of a household's gross income.

Among major metros, only one — Washington, D.C. — had a median household income that could afford a maximum monthly payment higher than $600.

"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 Interest.com.

It's not that auto buyers aren't in the driver's seat to help keep costs down, however.

"Car costs are one of the most controllable parts of a household's budget," Sante noted. "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."

 

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