According to recent research from Interest.com, of the 25 largest metropolitan areas in the United States, a median income household can only afford the average price for a new car in one area. The only metro that could afford the average prices of a new car was Washington, D.C.
"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. "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.
Sante added that you're better off driving something more affordable and saving, or investing the difference.
Interest.com recommends sticking to its 20/4/10 rule when deciding if a household budget can afford the cost of a light car or truck. The rule is a down payment should be at least 20 percent of the price of the car, financing should not last longer than four years and principal, interest and insurance for the vehicle should not exceed 10 percent of the household's overall income.
Cars are more valuable these days
While automakers would not be too happy with the latest report, cars nowadays are lasting longer and providing cost saving measures in other areas, like money spent on fuel. According to Kelley Blue Book, vehicles have never offered such a wide range of amenities at the prices they are offering.
"Since the 2011 model year, nearly every vehicle in each major selling category has undergone a significant redesign that has upped expectations of consumers by a sizable margin," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book . "Shoppers considering one of the latest and greatest can count on significant improvements in fuel economy, performance, build quality, amenities and style from the generation being replaced, and all for only a modest bump in its manufacturer's suggested retail price."
Those looking for good deals on new cars in February looked to buy Ford Fusion and Honda Accord. According to KBB, the Fusion was available with $1,500 in cash rebates or $20- per month for a 24-month lease with $2,588 due at signing while the Accord was available with a 36-month lease priced at $249 a home with $2,299 due at signing.