Think you spend the most on your car? According to new data, if you live in south Texas, you probably overspend on your vehicle and have the most auto-loan debt.
WalletHub released a report identifying the cities with the highest and lowest car-loan debts. In order to determine where Americans overspend on their set of wheels, the personal finance website compared the median auto-loan balance of more than 2,500 U.S. cities.
The cities that overspend on cars (leading to the most auto-loan debt) are Lake Placid, FL, San Juan TX, Rio Grande City, TX, Magnolia, TX and Dahlonega, GA. Rounding out the top ten are Donna, TX, Kingsville, TX, Bastrop, LA, Coachella, CA and Mercedes, TX.
As for the cities that spend the least on cars, the Empire State leads the pack (Scarsdale, NY and Bronxville, NY), followed by three affluent cities in California — Los Altos, Saratoga and Mill Valley. Cupertino, CA nabbed the sixth spot, followed by Westport, CT, Darien, CT, Palo Alto, CA and Bloomfield, MI.
Do Your Homework
In 2017, WalletHub noted, car sales dropped for the first time. And even though the industry remains strong, many drivers are on the road to financial ruin. According to the Federal Reserve Bank of New York’s latest report on household indebtedness, auto-loan balances have grown steadily over the past six years, increasing by another $23 billion in mid-2017.
What can folks do to avoid spending too much on a car? Do your research and know what you can afford.
According to Doris Sikora, Associate Professor of Family and Consumer Sciences Education at Western Kentucky University, the most common mistake people make when shopping for a car is to start shopping too soon. "They want to just look, but then ‘get the bug’ and end up purchasing before they are financially ready," she says.
She advises that no more than 15 percent of your income should go to car payments.
Something to think about as you shop for a new car in 2018.
For the full list of cities that spend the most on cars, check out WalletHub.com.