According to WalletHub’s latest study, many of us in certain parts of the country spend way too much money on our cars, and for people who live in multiple cities in Texas, that’s a serious problem.

Last year was a banner year for car sales as the industry saw an 11% increase in vehicles sold, which is great news! The auto industry, just like other industries, needed a comeback after the economic downturn due to COVID-19.

The flip side of the story is that some people who have bought a car in recent years have overextended themselves due to their debt-to-income ratio. WalletHub looked at the numbers and found that eight Texas cities had the highest levels of overspending when looking at median vehicle costs and median gross income of buyers.

How much of your salary should you spend on buying a car?

Depending on which expert you speak to, guidelines vary on how much of your annual salary you should spend on a car payment. MarketWatch says it should be between 10% and 15%, while New Trader U suggests most people stick to the 20/3/8 rule, which goes like this:

… a down payment of at least 20% of the car’s price, limiting the loan term to three years, and ensuring that your car payment does not exceed 8% of your monthly income.

There is also the 20/4/7 rule. Robbie Morris, financial planner at Roots Financial Planning, recommends putting down at least 20% of the vehicle’s price. He recommends never taking out a four-year loan and never making monthly payments more than 7% of gross income.

Any of the above plans can be extremely difficult to implement if you don’t earn much and need a car to get to work. Inflation is a serious problem for anyone who needs to make purchases or pay off debt, and that’s true for most people. For most, the struggle is real.

Here is WalletHub’s top ten list of cities where people will spend the most on cars in 2024:

1. Rio Grande City, Texas
2. Donna, Texas
3. Mercedes, TX
4. San Juan, Texas
5. San Benito, Texas
6. Jacksonville, Texas
7. Tolleson, Arizona
8. Brownsville, Texas
9. Willis, Texas
10. Bastrop, LA

Taking into account all car sales in Rio Grande, Texas, the experts at WalletHub, according to their statistics, show that the average cost of borrowing a vehicle is $30,418, while the average salary is $31,186. WalletHub says this is one of the criteria that helped Rio Grande, Texas, rank so low when it comes to “cities’ money management skills.”

Rio Grande, Texas, is clearly not alone. WalletHub analyst Cassandra Happe had this to say:

Many Americans spend too much money on cars: In over 200 cities, the average resident’s car loan debt is half or more of their annual income. Residents who have to take out these expensive loans on top of their debt from credit cards, personal loans, student loans and mortgages run the risk of falling behind on payments and having their vehicles repossessed.

Here is a quick overview from WalletHub: