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Unless You Live in This City, Chances Are You Can’t Really Afford a New Car

Millennials catch a lot of flak for things. From think pieces to disapproving parents, the newest generation of adults gets criticized a lot. Millennials don’t buy houses in suburbs like baby boomers did. They don’t have as many children. They don’t buy as many cars. These trends might sound like the beginnings of a major cultural shift. But there also could be a simpler reason: These choices are becoming increasingly expensive.

As of 2015, the median income for households of 25- to 34-year-olds was around $55,000. In May 2017, the average price for a new car was $33,261, according to Kelley Blue Book. For most younger buyers, that’s a prohibitively large chunk of change. Add to it the fact that there’s been a generational shift back to cities. And once you factor in high rent, cost of living, and exorbitant insurance rates, any car becomes a luxury.

The rule of thumb for buying a new car is the 20-4-10 rule: Put 20% down on the price, never agree to a car loan longer than four years, and make sure your annual payments don’t exceed 10% of your annual income. As sensible as that sounds, that’s becoming a tall order for more and more Americans. Triangulating insurance data from The Zebra, sales tax figures from TaxJar, and information from the most recent Census, Bankrate factored how much new car the average urban American can afford. Shockingly, every major city but one falls short. 

10. Portland, Oregon

Portland cityscape

Portland cityscape A view of Portland | iStock.com

Portland is a breathtaking, vibrant, and proudly unique city. And with its rainy weather, it’s a haven for all-wheel drive cars, such as Subarus. But there are plenty of older cars in this Northwestern city, too, and that’s probably no accident: The average Portlander can afford a $23,208.91 car. That falls 30.22% short of the average price of a new car.

Next: This big league town falls far short. 

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