If you believe everything a car salesman says, you’ll end up spending way more on a vehicle than you should. Whether you upgrade to a fancier model, extend the life of a loan, or accept a high-interest rate, a bad vehicle purchase could haunt you (and your credit) for years.
According to a February 2018 report by WalletHub, the situation is dire in many cities — especially in the South and Southwest. In some places, it’s normal for buyers to take on debt that equals more than half a year’s income.
The experts that WalletHub consulted for this report offered a number of tips for avoiding this situation. Among them were:
- Rejecting an emotional approach (i.e., the Fast and Furious method) to car-buying
- Knowing your credit and loan options beforehand
- Factoring in costs like gas, maintenance, and parking
Clearly, some folks — many living in the heart of Car Country, U.S.A. — are looking for the coolest ride in town and forgetting this common-sense advice. Here are the 15 U.S. cities where people pay way too much for their cars.
15. Brownsville, TX
The border town of Brownsville lies about 200 miles south of Laredo. Both cities have a low median income and a large amount of auto loan debt, but only Brownsville made the top 15.
Overall, WalletHub found $19,110 in median auto debt compared to the $28,397 median salary in Brownsville, placing the city in the 99th percentile.
Next: This Georgia town is in way over its head when it comes to car loans.
14. Moultrie, GA
While Moultrie may not be a major city like Brownsville, the landlocked Georgia town has major-league auto debt. Compared to Moultrie’s $26,296 median salary, a typical car loan has an outstanding balance of $17,821.
Whether you calculate the ratio of debt to annual salary (68%) or just glance at the numbers, you can see it’s bad news. WalletHub experts say car buyers should only spend 10-15% of their annual income on a ride.
Next: This Florida lake town is underwater on its car loans.
13. Okeechobee, FL
Some 40 miles west of Port St. Lucie, you’ll find the town Okeechobee, home to one of the biggest freshwater lakes in the U.S. You’ll also find one of the many Florida towns struggling with car debt.
Okeechobee’s median income ($27,382) is no match for the typical outstanding auto loan ($18,608).
Next: Areas around Dallas feature unusually large amounts of car loan debt.
12. Corsicana, TX
Among America’s largest 20 cities, El Paso featured the worst loan-to-income ratio, with a rank in the 93rd percentile. A little further down the list (81st percentile) came the cities of Dallas and Houston.
Corsicana, located 60 miles south of Dallas, had America’s 12th-worst ratio of auto loans ($21,875) to income ($31,995).
Next: It would take nearly 70% of the median income to pay off auto debt in this Louisiana town.
11. Leesville, LA
As you read through the WalletHub data, you’ll notice large car loans in Southern towns with low median incomes. In Leesville, Louisiana ($29,892 median income), the median car loan has over $20,000 outstanding.
Compared to a place like Scranton, Pennsylvania ($36,554 median income), you’ll see much less auto debt ($11,000). In fact, you’ll hardly find a town in the Northeast above the 80th percentile — even where the income is low.
Next: Another Texas border town makes the list.
10. Mercedes, TX
Another Texas border town, another area with huge car debt. This time, the town of Mercedes has nowhere the median income ($26,834) to keep up with the median vehicle loan ($18,559).
In total, such a car loan would swallow about 70% of a typical annual salary in Mercedes. With any sort of down payment, the total car price would be getting close to a full year’s income.
Next: A California city famous for the nearby music festival cracked the top 10.
9. Coachella, CA
You may know Coachella for the annual music festival of the same name, but that takes place in nearby Indio, California. (Both towns reside in the Coachella Valley east of Palm Springs.)
Like every other place on this list, Coachella is a drive-or-you’ll-never-get-there kind of town. (Public transportation is hardly an option.) According to the WalletHub stats, the town median income ($26,506) can’t begin to handle its median auto debt ($18,782).
Next: This town in northern Louisiana is losing population and drowning in debt.
8. Bastrop, LA
The small town of Bastrop, Louisiana is about halfway between Shreveport and Jackson, Mississippi. Following the closing of Bastrop’s paper mill and poultry plant during the Great Recession, the city began rapidly shrinking.
In the latest survey, the town’s median income ($22,304) was nowhere enough to cover its median auto loan ($15,832).
Next: Southern Texas notches another city on this list.
7. Kingsville, TX
If you want to see a scary auto debt-to-income ratio, check out that of Kingsville, Texas. This town, which sits about 45 miles southwest of Corpus Christi, showed its median debt ($23,647) near 75% of the town’s median income ($32,379).
Since that salary is the highest on this list, you have to pin much of the blame on the car buyers. Clearly, the “emotions” factor get the best of too many consumers in Kingsville.
Next: Yet another border town claimed sixth place.
6. Donna, TX
The town of Donna sits 10 miles to the west of Mercedes (No. 10) and 50 miles west of Brownsville (No. 15) near the Texas-Mexico border. Clearly, car culture in this part of the country deems a ride more important than financial security.
Donna’s median income ($27,891) suggests used vehicles should be the sensible choice for most consumers here.
Next: Northeast of Atlanta, a low-income town had nearly an 80% debt-to-income ratio.
5. Dahlonega, GA
Only one city on this list had a lower median income ($21,883) than Dahlonega, Georgia. This town, situated 65 miles northeast of Atlanta, showed over $17,000 in debt for the median car loan. In other words, it would take about 80% of someone’s median salary to pay off the median loan.
Next: The situation north of Houston is even worse.
4. Magnolia, TX
The tiny town of Magnolia sits about 45 miles northwest of Houston and has an even worse record for car debt. Matched against a median income of $27,000, the median car loan of $21,000 just won’t get paid on time.
Next: The repo man is busy in this border town.
3. Rio Grande City, TX
As of 2017, Americans had over $1 trillion in car loans spread across 107 million people. You read that right: One in three Americans owes money to a bank for their vehicle.
In places like Rio Grande City, right smack on the border with Mexico, repossessions are a common occurrence. While residents post a median income of $31,500, the typical car loan stands at $25,200.
Next: The situation in nearby San Juan was even worse.
2. San Juan, TX
South Texas is clearly the worst area in America when it comes to owing more on a car than people can afford. This time, the town of San Juan — the third on this small stretch of Interstate 2 — claimed over 80% of the median salary owed for a vehicle.
Next: This Florida town claims the highest rate of car debt in the country.
1. Lake Placid, FL
If you travel through central Florida, you’ll find the small town of Lake Placid in Highland County, not far from Lake Okeechobee. This area rivals southern Texas for out-of-control spending on cars.
It won’t take a mathematician to see that a median salary of $19,153 can’t begin to manage a median auto loan of $17,023. That’s nearly 90% of a year’s wages and the definition of unsustainable.
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