Mr. Jones, now 22 years old, walked out with a gray Accord sedan with heated leather seats. He also took home a 72-month car loan that cost him and his then-girlfriend more than $500 a month. When they split last year and the monthly payment fell solely to him, it suddenly took up more than a quarter of his take-home pay.
He paid $27,000 for the car, less than the sticker price, but took out a $36,000 loan with an interest rate of 1.9% to cover the purchase price and unpaid debt on two vehicles he bought as a teenager. It was particularly burdensome when combined with his other debt, including credit cards, he said.
Just 18% of U.S. households had enough liquid assets to cover the cost of a new car, according to a Wall Street Journal analysis of 2016 data from the Fed’s triennial Survey of Consumer Finances, a proportion that hasn’t changed much in recent years.
Even a conservative car loan often won’t do it. The median-income U.S. household with a four-year loan, 20% down and a payment under 10% of gross income—a standard budget—could afford a car worth $18,390, excluding taxes, according to an analysis by personal-finance website Bankrate.com.
Related: Discovery, Connected and Singapore Math.
Madison’s math task force.
21% of University of Wisconsin System Freshman Require Remedial Math
.