Report: Providence 10th lowest for car affordability in nation

PROVIDENCE ranks 41st for car affordability in the nation, according to a new study from Bankrate.com. / COURTESY BANKRATE.COM/GETTY IMAGES
PROVIDENCE ranks 41st for car affordability in the nation, according to a new study from Bankrate.com. / COURTESY BANKRATE.COM/GETTY IMAGES

PROVIDENCE – Rhode Island’s capital city is the 10th worst when it comes to car affordability, according to Bankrate.com.
The study, released Thursday, said that a median-income household cannot afford the average-priced new car or light truck in any of the 50 largest U.S. cities.
The average price of a new car or light truck in 2016 was $33,865, according to Kelley Blue Book.
Bankrate, a consumer financial services company, calculated 10 percent of the monthly median gross household income in each of the 50 largest U.S. cities and subtracted the average monthly insurance premium in that area to determine the maximum amount that the median-income household should spend on monthly car payments, including principal and interest.
Based on that criteria, Providence residents, with a median income of $37,420, can only afford a car that’s $11,297.32 and an annual insurance payment of $1,066.25. That translates to a maximum monthly payment of $223.
San Jose, Calif., ranked the highest for car affordability, with a median income of $87,210. There, residents can afford a $32,855.81 car, with an annual insurance payment of $782.63 and maximum monthly car payments of $662.
“People are spending far too much money on their cars,” Steve Pounds, personal finance analyst at Bankrate.com, said in a statement. “There are many safe, affordable and stylish options on the market for people to choose from that won’t cut into more important budget items; such as college funds and retirement savings.”

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