It’s easy to overspend on everyday things like electronics, toiletries and even groceries, but it’s even easier to overspend when it comes to buying a car. No, it’s not like you buy a Lexus when you can only afford a Toyota, but it appears that most Americans just buy too many cars for their family income. So here’s a list of the top 10 U.S. cities that spend the most on cars, according to WalletHub.
Top 10 cities that spend too much on cars
- Rio Grande, Texas.
- Willis, T.X.
- Livingston, Texas.
- Alice, TX.
- Bastrop, Los Angeles.
- Donna, TX.
- San Juan, Texas
- Leesville, LA.
- Uvalde, Texas.
- Alamo, Texas.
As we can see, the list is very heavy, and technically this should come as no surprise, as this huge state has many cities to get data from. Speaking of data: WalletHub compiled this list by comparing the average balance of car loans in more than 2,500 cities across the country. Then the average household income in each state was taken to obtain the debt ratio for each state and the states were ranked accordingly.
For example, the average auto loan debt for the city of Rio Grande, Texas is $23,457 and the average household income is $27,419. As a result, the city’s debt-to-GDP ratio is 86%, putting it at the top of the list of cities that overspend on cars.
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These are the cities that spend the least on cars.
- Los Altos, California.
- Cupertino, California.
- Birmingham, MI.
- Lexington, Massachusetts.
- Palo Alto, California.
- Saratoga, California.
- Needham, Massachusetts.
- Garden City, New York.
- Hoboken, N.J.
- McLean, VA.
In case you were wondering, Los Alto, California tops this list because the average auto loan debt is $16,193 while the average median household income is $180,479, resulting in a debt-to-income ratio of 9%. According to WalletHub, each city’s median income is based on the 2019 income of people age 16 and older who work full-time.
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Why do Americans spend so much on cars?
The question is not so much why, but how Americans spend too much money on cars. This data shows that the lower the average income, the higher the debt-to-income ratio, while the average price of a new car is about $40,000. Conversely, if we look at the cities that spend the least on cars, we see that the median income is well over $100,000, with a much lower amount spent on cars, usually less than $20,000.
However, if you find yourself in a situation where you have high debt relative to your income due to a car loan, or if you are considering buying a new car soon, here are some tips you can follow:
- Buy at a good interest rate: Just like buying a car, you can find the lowest interest rate and save money by shopping around at different banks and credit unions. The same goes for refinancing your current car loan.
- Choose a shorter repayment period: According to Edmunds, your loan should last no longer than 60 months, but the shorter the better.
- Choose your next car carefully: When buying a car, it’s important to consider your wants and needs, but don’t forget the price and what you can comfortably afford.
- It’s time to make a purchase: If you want to save money on your next car, start shopping in the last quarter of the year, preferably at the end of the month. Dealers have quotas to meet and cars to sell, so their needs can work in your favor.
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