Are Americans Being Priced Out of New Cars?
Many people living in lower-income areas simply cannot afford new vehicles, says Fortune.
Let's be honest, the dealership model is a really bad business model for consumers. For many un-informed buyers, buying a car can be an intimidating process and the often deception-ridden dealership experience doesn't help. Doing anything to change this model results in nothing but lawsuits, and it's gotten to a point where even the manufacturers are sick of it. This tedious process isn't just dealerships' fault though—cars have gotten pretty bloody expensive in the past few decades. Everyone seems to remember the "good ol' days" when anyone, regardless of income, could pick up a brand new car for a couple thousand dollars and still afford to put food on the table. (Whether or not that was ever actually true, however, is another issue.) Now, a new car costs on average over $35,000—which isn't feasible for the average American household.
Fortune is investigating the car-buying experience, and how we can deal with it. The publication's latest article focuses on lower-income families that already struggle to afford to live in huge cities. For instance, if a person who makes average income in Miami applies the 20/4/10 rule when buying a car, they can spend roughly $13,000 on an automobile; remember, new cars cost on average more than twice this amount. Car affordability varies by city, and Fortune mentions that the cities with the highest prices are Detroit, San Antonio, Orlando, Miami, and Tampa; the best cities for buying a car are San Francisco, Minneapolis, Boston, and Washington D.C.
The obvious solution is also the most sensible one: don't buy a new car if you can't afford it. You don't necesarily need to get something with Adaptive Cruise Control and a fancy infotainment system with smartphone integration. Fortune recommends buying used—especially considering that most modern cars last for hundreds of thousands of miles without crippling repair bills, and you can still find some pretty good vehicles with creature comforts if you know how to shop.
If you still want something new, Fortune says to pay attention to the price. Dealerships can and will gouge you, so you need to really do your research.