2026 Car Affordability Index

The Gap Between What Americans Earn and What Cars Cost

The average new car in America costs $48,000. The average car payment has climbed to $775 per month on a 72-month loan. And the average American household earns $80,610 per year.

But when you apply the 20/4/10 rule — the financial framework that advisors actually recommend — the picture changes dramatically. The 20/4/10 rule says: put 20% down, finance for no more than 4 years, and keep total car costs (payment + insurance + maintenance) under 10% of your gross monthly income.

Using this framework, we calculated the “safe” car budget for a median-income household in all 50 US states and the 25 largest metro areas. The results reveal a nationwide car affordability crisis that affects every single state — from Mississippi to Maryland.

You need to earn $158,931 per year to safely afford the average $48,000 new car. That's nearly double the US median household income. Even Maryland — the highest-income state — falls $20,000 short of a safe budget for the average new car.

Five Surprising Findings from the State Data

1. Even the Wealthiest State Falls Short

Maryland has the highest median household income in the country at $98,461. Its safe car budget is $28,141 — still 41% below the average new car price. The gap between what even affluent states can responsibly afford and what cars actually cost is enormous.

2. The “Lender Trap” Is Universal

In all 50 states, lenders would approve median-income families for far more car than they should buy. In Colorado ($87,598 median income), a lender would approve up to $99,370 — that's 4x the safe budget of $24,574. This gap between “what you qualify for” and “what you should spend” is where car poverty begins.

3. Mississippi's Car Budget Buys a 10-Year-Old Sedan

At $48,610 median income, Mississippi's safe car budget is just $11,770. That's the price of a used 2016 Honda Civic with 90,000 miles. The state with America's lowest median income has a safe budget that's 75% below the average new car price.

4. The $159K Threshold

To safely afford the average new $48,000 car, a household needs to earn approximately $158,931 per year. That puts the average new car in the “safe” zone for fewer than 10% of American households. The average new car has become a luxury good by responsible financial standards.

5. Even “Stretching” Doesn't Help

Using the more aggressive “stretch” budget (15% of income instead of 10%), still zero states can afford the average new car at median income. Even the stretch budget in Maryland ($44,309) falls $3,691 short. The affordability crisis is so severe that relaxing the rules doesn't solve it.

Metro Area Insights

Only 4 Metros Can Stretch to Afford the Average New Car

Out of the 25 largest US metro areas, only San Jose, San Francisco, Washington DC, and Seattle have median incomes high enough to afford a $48,000 car at the stretch level — and none can do it at the safe level. These four metros all have median household incomes above $115,000.

Car-Dependent Cities Have the Biggest Problem

Houston, Dallas, Atlanta, and Phoenix — cities with limited public transit where car ownership is essentially mandatory — have safe car budgets between $18,000 and $20,000. In cities where you need a car, the car you can responsibly afford is a used compact with high mileage.

Miami's 70% Gap

Miami has the widest affordability gap of any major metro at 70%. With a median income of $57,108, the safe car budget is just $14,561. Factor in Miami's higher-than-average insurance costs (which our calculation uses a national average for), and the real gap is even worse.