Toyota Yaris
After taxes and insurance, a median-income earner in Tampa can afford a Toyota Yaris, says a recent study. (Toyota Motor Sales, U.S.A., Inc.)

Most Americans are spending more than they can afford on a new car, according to a study released this week by, a subsidiary of Bankrate, Inc. Analysts looked at the median income, insurance rates and taxes in 25 cities to determine the affordability of a new vehicle based on region. They compared those figures with Kelley Blue Book’s average price of a new car, truck or SUV last year, which was $32,086.

Washington, D.C. is the only city where households can afford to pay more than the average new car price, at $32,531, the study finds. Tampa ranks last, with the average income earner able to pay $14,209 on a new car. That’s roughly the difference between buying a Hyundai Accent and a Cadillac ATS. In the middle are cities like Chicago, where the average resident can afford to pay $21,409 for a new vehicle.

10 Cities with Lowest New Car Affordability

City                Can Afford      Can Buy

Tampa             $14,209           Toyota Yaris

Miami              $15,174            Kia Soul

Detroit             $17,352           Hyundai Elantra

Pittsburgh        $17,965           Subaru Impreza

Phoenix           $18,199           Honda Civic

San Antonio     $18,376           Jeep Compass

St. Louis          $19,016           Toyota Prius c

Atlanta             $20,000           Dodge Journey

Milwaukee        $20,013           Mazda Mazda5

Houston           $20,271           Volkswagen Beetle

The affordability study used an interest rate of 4.16 percent, which was the average rate for a four-year new car loan earlier this month. While many car buyers opt for lower monthly payments and a longer loan, this can be detrimental in the long run. The analysts advocate a "20/4/10" rule that buyers make a down payment of at least 20 percent, finance for no more than four years and pay no more than 10 percent of their total monthly income before taxes on vehicle expenses, including car payments and insurance.

How can you figure out a reasonable monthly payment? says to calculate 10 percent of your monthly income before taxes and subtract your monthly insurance premium. The result is a car payment that’s affordable for you. To save money, you can look for car deals including zero percent financing and low interest rate offers from the automaker, as well as cash back incentives.

Consumer Reports also recommends putting at least 20 percent down on a new car, which can include the value of a trade-in vehicle. The magazine says you should take into account all of your debts, including mortgage or rent payments, credit cards and other loans. Combined with your car payment, these expenses should not exceed 36 percent of your pre-tax income.   

Crunch the numbers for yourself using our Car Affordability Calculator. Are you surprised by what you can afford?

In the market for a new car? Check out the U.S. News rankings of this year’s best cars. Then, look for a great deal on a new vehicle by checking out this month’s best car deals. Also, be sure to follow us on Twitter and Facebook.