Due to the COVID-19 pandemic, U.S. auto sales had a lackluster year in 2021, up only 2.5% from 2020. Luckily, early forecasts predict that the market will continue to grow during 2022, with the biggest growth coming during the second half of the year. Typically, we see an increase in auto purchases after tax season, especially on Presidents’ Day weekend.
Despite the low growth in the auto market last year, consumer auto debt still increased significantly. According to the Federal Reserve Bank of New York’s latest report on household indebtedness, auto-loan balances have grown over the past nine years, increasing by another $28 billion in Q3 2020.
But not every city is alike. In order to determine where Americans overspend on their set of wheels, WalletHub compared the median auto-loan balance of more than 2,500 U.S. cities. Prior to shopping for a new vehicle, we recommend prospective car buyers check their credit scores for free on WalletHub and use a Car Payment Calculator to determine an auto-loan payment and timeline they can afford.
Main Findings
Cities with the Most Auto Loan Debt
| Percentile Rank* | City | Median Auto-Loan Debt | Income | Debt-to-Income Ratio |
|---|---|---|---|---|
| 1 | Rio Grande City, TX | $25,919 | $27,419 | 95% |
| 1 | Willis, TX | $21,827 | $25,570 | 85% |
| 1 | Bastrop, LA | $17,264 | $21,583 | 80% |
| 1 | Donna, TX | $21,124 | $26,558 | 80% |
| 1 | Deming, NM | $22,509 | $28,328 | 79% |
| 1 | San Juan, TX | $25,032 | $31,681 | 79% |
| 1 | Uvalde, TX | $23,671 | $30,423 | 78% |
| 1 | Alice, TX | $26,329 | $34,056 | 77% |
| 1 | Livingston, TX | $23,785 | $31,007 | 77% |
| 1 | San Luis, AZ | $23,030 | $30,106 | 76% |
| 1 | Mercedes, TX | $20,699 | $27,351 | 76% |
| 1 | Leesville, LA | $23,528 | $31,341 | 75% |
| 1 | Brownsville, TX | $22,397 | $30,409 | 74% |
| 1 | Weslaco, TX | $25,432 | $34,556 | 74% |
| 1 | Moultrie, GA | $20,008 | $27,407 | 73% |
| 1 | Lake Placid, FL | $19,288 | $26,563 | 73% |
| 1 | Watertown, WI | $29,238 | $40,612 | 72% |
| 1 | Dahlonega, GA | $19,223 | $27,266 | 71% |
| 1 | Alamo, TX | $23,004 | $32,810 | 70% |
| 1 | Pharr, TX | $22,598 | $32,456 | 70% |
| 1 | Fredericksburg, TX | $23,935 | $34,559 | 69% |
| 1 | Raeford, NC | $21,189 | $31,063 | 68% |
| 1 | Palatka, FL | $19,776 | $29,066 | 68% |
| 1 | Tolleson, AZ | $21,352 | $31,738 | 67% |
| 1 | San Benito, TX | $20,370 | $30,530 | 67% |
| 1 | Big Spring, TX | $24,978 | $37,636 | 66% |
| 1 | Mount Pleasant, TX | $21,238 | $32,237 | 66% |
| 1 | Paris, TX | $20,183 | $30,725 | 66% |
| 1 | Avon Park, FL | $17,587 | $26,941 | 65% |
| 1 | Morrow, GA | $17,657 | $27,457 | 64% |
*Highest Car Loan Debt-to-Income Ratio = 1st Percentile
Ask the Experts
Buying a car isn’t as straightforward as making everyday purchases. The former involves multiple steps and requires prior research, a reasonable budget and some negotiating skills. But buying isn’t for everyone, either. For guidance on the proper way to purchase or lease a car, we asked a panel of experts for their thoughts on the following key questions:
- What are the most common mistakes people make when shopping for a car?
- In what circumstances is leasing a smarter option than buying?
- Generally, what percentage of take-home pay should go to car payments?
- What are your predictions for car sales in 2022? Should we expect to see an increase prompted by a lack of confidence in public transport, or less commuting due to more people working from home?
Ask the Experts
Program Director for Walden University's College of Management and Technology
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JD, CFP® – Director, Personal Financial Planning Program; Associate Professor – Finance, Gordon Ford College of Business – Western Kentucky University
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Ph.D., CFP® – Retired Professor, Personal Financial Planning, School of Financial Planning – Texas Tech University
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Ph.D. Candidate, Gatton College of Business and Economics – University of Kentucky
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Associate Professor, Decision Sciences and Marketing, Robert B. Willumstad School of Business – Adelphi University
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MPH, AFC® – Financial Wellness Educator, Family and Consumer Sciences – University of Maryland Extension, Central Maryland
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Methodology
In order to identify the cities with the highest and lowest car-loan debts, WalletHub divided the median car-loan debt by residents’ income in each of 2,531 U.S. cities as of September 2021, based on TransUnion data. The median income for each city is based on the 2019 earnings of individuals aged 16 and older who worked full-time year-round, according to the U.S. Census Bureau's American Community Survey. The figure excludes income from sources other than work. Our sample considers only city proper in each case and excludes cities in the surrounding metro area. A percentile rank of “99” represents the city with the smallest ratio of car-loan debt to income.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau and TransUnion.