Ithacans are paying too much for their car loans.  A recent study on wallethub.com ranks Ithaca as 2551 out of 2570 US cities, placing the city among the bottom 20 US cities with a 161% debt-to-income ratio for car loans.  According to the study, Ithaca is the worst city in New York State for getting a car loan, at least in terms of the percentage buyers spend or their annual income.

"The most common mistake people make when shopping for a car (or anything else) is to lose sight of their budget, their existing and forthcoming financial obligations," says Angelo State University Accounting, Economics and Finance Professor Sahit Murat Kara. "Most of us are already burdened with high amounts of debt and, although we are not thinking about it at that moment, in a few months we will have to have the roof of our house redone, or have to replace the AC unit. Not the best time to purchase the $50,000 dream truck, is it?"



Some of New York's wealthier communities place at the top of the list.  Scarsdale, with an average income of $106,389 ranks number 1 with the lowest debt-to-income ratio of 15%.  Bronxville ranks number 2 with 16%.

Experts say car buyers should calculate how much of their take-home pay they can afford for car payments in a range between 10% and 20%.

"I recommend limiting monthly car payments to 10-12% of take home pay," says Bucks County Community College Associate Professor of Management & Marketing Greg Luce.  "When you consider the variable costs of owning a car, including fuel, maintenance, insurance, etc., overspending on monthly payment does not necessarily allow for these additional expenses."

The study divided the average car-loan debt by residents’ income in each of 2,570 U.S. cities as of September 2015, based on TransUnion data.

v12i6