Due to the COVID-19 pandemic, U.S. auto sales had a very unfortunate year in 2020, down around 15% from 2019. Luckily, early forecasts predict that the market will bounce back somewhat it 2021, with a growth of around 7% to 10% compared to 2020. Typically, we see an increase in auto purchases after tax season, especially on Presidents’ Day weekend, though with the pandemic still raging across the U.S., this period may be less profitable than usual.
Despite the lackluster auto market last year, consumer auto debt still increased. 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 $17 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 |
|---|---|---|---|---|
| 99 | Rio Grande City, TX | $23,457 | $27,419 | 86% |
| 99 | Willis, TX | $20,814 | $25,570 | 81% |
| 99 | Livingston, TX | $22,660 | $31,007 | 73% |
| 99 | Alice, TX | $24,859 | $34,056 | 73% |
| 99 | Bastrop, LA | $15,666 | $21,583 | 73% |
| 99 | Donna, TX | $18,805 | $26,558 | 71% |
| 99 | San Juan, TX | $21,976 | $31,681 | 69% |
| 99 | Leesville, LA | $21,374 | $31,341 | 68% |
| 99 | Uvalde, TX | $20,341 | $30,423 | 67% |
| 99 | Alamo, TX | $21,922 | $32,810 | 67% |
| 99 | Raeford, NC | $20,660 | $31,063 | 67% |
| 99 | Mercedes, TX | $18,067 | $27,351 | 66% |
| 99 | Pharr, TX | $20,909 | $32,456 | 64% |
| 99 | Douglas, GA | $20,678 | $32,270 | 64% |
| 99 | San Luis, AZ | $19,262 | $30,106 | 64% |
| 99 | Brownsville, TX | $19,449 | $30,409 | 64% |
| 99 | Tolleson, AZ | $20,109 | $31,738 | 63% |
| 99 | Deming, NM | $17,919 | $28,328 | 63% |
| 99 | Weslaco, TX | $21,731 | $34,556 | 63% |
| 99 | Big Spring, TX | $23,636 | $37,636 | 63% |
| 99 | San Benito, TX | $19,046 | $30,530 | 62% |
| 99 | Lake Placid, FL | $16,554 | $26,563 | 62% |
| 99 | Cordele, GA | $17,755 | $28,687 | 62% |
| 99 | Palatka, FL | $17,863 | $29,066 | 61% |
| 99 | Dahlonega, GA | $16,708 | $27,266 | 61% |
| 99 | Laredo, TX | $21,420 | $35,007 | 61% |
| 99 | Walterboro, SC | $15,562 | $25,461 | 61% |
| 99 | Coachella, CA | $18,305 | $30,017 | 61% |
| 99 | Eagle Pass, TX | $22,065 | $36,218 | 61% |
| 99 | Morrow, GA | $16,694 | $27,457 | 61% |
*Highest Car Loan Debts = 99th 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 2021? 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
- Robert R. Johnson
Professor of Finance, Heider College of Business – Creighton University
Read More
- John S. Jahera, Jr.
Lowder Professor Emeritus, Department of Finance, College of Business – Auburn University
Read More
- John Longo
Professor of Finance – Rutgers, The State University of New Jersey Business School and author of Buffett's Tips: A Guide to Financial Literacy and Life
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- J. Keith Baker
MSFS, MBA, CPA, CFP, CGMA, CREI – Faculty-North Lake Campus of Dallas College
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- Andrea Lee Negroni
JD – Adjunct Associate Professor of Law, Washington College of Law – American University
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- V. Gerard (Jerry) Comizio
Associate Director and Professor, Business Law Programs, Washington College of Law – American University
Read More
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 2020, 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 highest ratio of car-loan debt to income.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau and TransUnion.