According to the article, the average American devotes 15-20% of take-home pay (approximately $8,000 per year) on car payments, with additional money spent for gas, maintenance, parking, and insurance.

Surely, we all have seen examples of people buying automobiles above their income level, e.g., purchasing a full-size truck or SUV instead of a compact or mid-size car, or a luxury or sports car instead of a generic model. To afford more expensive cars, the article explains, more and more Americans are using long-term financing (more than 4 years), which means they are spending more on interest and building equity more slowly. Furthermore, 25 percent of car loans include debt rolled over from a previous vehicle. As Ms. Weston states: “Rolling debt from one car to another is . . . a terrible idea.”

Here’s the rest of the article.