Which used car brands do borrowers stretch their finances most to buy?

Financing a car is one of the more significant financial decisions Americans make, and even those of us who try to save money by buying used cars can struggle to afford the monthly car payments.

But are there brands that people are more likely to stretch their available incomes to own? To answer that, we looked at people who found auto loans on the LendingTree.com platform in 2017 to buy used vehicles.

For the full report, click here.

Contrary to popular assumptions, we find that people aren’t going broke to buy used luxury cars that are seen by many as granting high status to their drivers. In fact, buyers of the most expensive cars seem to handily afford them.

On the other hand, we found Buick owners have the hardest time affording their car payments — but not because they’re indulging in particularly expensive vehicles. It’s because their income tends to be on the lower side, meaning they use a larger share of it to cover their monthly payments.

Tesla buyers can best afford their cars

As unlikely as it seems, the most expensive car make we assessed[1] is the one its buyers can most easily afford – by a considerable amount. The reason for this is simple: Tesla buyers have the highest incomes out of all those who used the LendingTree platform to finance their purchase of used cars. We estimate buyers are spending about $54,234 to buy a used Tesla, with an average monthly payments of $818. 

But because they’re such high earners, the average Tesla buyer is only spending an average of 4.6% of their reported monthly income to pay it off. To put that in context, we estimate that the average used car buyer on our platform pays 8.9% of their monthly income on car payments.

Tesla has good company with other luxury makers. Porsche is the second most expensive used car we reviewed, with an average estimate price of $42,173 and an average estimated monthly payment of $635.

Yet, Porsche owners are only spending on average 5% of their monthly income on the car note. Volvo, Land Rover, Lincoln, Lexus, Audi and Acura are also affordable to their owners, who pay between 6-7% of their income toward their car debt.

People are paying plenty for used Land Rovers (an average of $31,704), but buyers of other makes kept their purchase rates to a more moderate range of $20,877 for Volvos on the low end and $26,725 for Audis on the high.

Of non-luxury makes, Mini and Subaru owners can best afford their cars

Outside of the luxury market[2], Mini owners spend the smallest share of their income on their monthly payments. At 5.7%, they come in just behind Tesla and Porsche owners, but they do it by buying their cars for a humble $17,728, with monthly payments of about $355. Owners of the more popular Subaru also stay well within their means, spending just 7.2% of their monthly income on car payments of $361, for an average price tag of $19,219. 

At 7.7% and 7.8% of monthly income, Toyota and Mazda buyers are the only other used car purchasers to come in under 8% of monthly income spent on car payments. Toyota owners spend an average of $19,788, which results in average monthly payment of $385 and Mazda buyers spend an average of $18,326 on Mazdas, which came to an average monthly payment of $355.

Borrowers are breaking the bank to buy Buicks and Chryslers…and Nissans, Dodges and Chevrolets

Buick and Chrysler owners who took out a loan to finance the purchase of a used car in 2017 are spending an average 10.9% of their monthly income to make $418 and $440 monthly payments, respectively.

That’s more than twice the percentage of income that Tesla and Porsche owners spend on their car payments.

It’s not that the buyers are paying an exorbitant amount for those cars, relative to the other buyers on our platform; Buick buyers spent an average of $18,597 on their vehicles, and Chrysler buyers slightly less with an average of $18,497, but their reported monthly earnings fall on the lower end of our group, and they get the least favorable loan terms.

Rounding out the list of borrowers who spend more than 10% of their monthly income on car payments are buyers of Nissan (10.6%), Dodge (10.6%) and Chevrolet (10.2%). Nissan owners pay about $18,231 and have monthly payments of $405; Dodge and Chevrolet buyers spend more at $22,290 and $20,930, resulting in average monthly payments of $454 and $437, respectively. While Dodge and Chevrolet owners do make more, on average, than Buick and Chrysler owners, they are spending considerably more than other buyers who stretch to pay for their cars. 

Before we judge them too harshly, though, we note these two makes include a lot of pickup trucks, which are more expensive than other body types, but are also practical for a lot of Americans.

After Buick, Cadillac is the luxury brand buyers stretch the most to own 

At 8.8% of their reported income, Cadillac owners are willing to spend the largest percentage of their monthly income among buyers of used luxury makes. They’re also willing to pay the healthy average price of about $25,294, which results in an average payment of $480.

Jump several places down the list to see other luxury cars, where several are clustered around 7.5% of monthly income. Jaguar, Infiniti, BMW and Mercedes-Benz owners paid about $27,734, $24,728, $25,038 and $28,792, respectively, which come to average monthly payments of $503, $454, $476 and $519, respectively.

Buying used can save substantial money, but financing can be trickier

“For most Americans, price and monthly payment are still significant deciding factors, as they are often searching for a vehicle to fit within a certain budget. Used cars offer a huge price advantage and are great for those who are less picky about having the most current features. But used cars often have fewer dealer incentives, such as low financing, to capture buyers,” explained Mike Ouyang of LendingTree’s auto division.

“This means you could also save big by shopping around for financing first, like you would for vehicle inventory prices on sites like CarGurus.”

LendingTree and other outlets regularly publish helpful information, such as this guide how to finance to get your wheels. 

Methodology 

This study used data of borrowers who used the LendingTree.com platform to complete auto loans to purchase used cars and light vehicles in 2017. Purchasers who did not report income were excluded, and car makes with too few purchases to draw reliable conclusions were also excluded.

Average estimated vehicle cost is the sum of self-reported down payment amounts and actual loan amounts averaged across all purchasers of that make. Average estimated monthly payment is the monthly payment of each buyer (calculated on amount borrowed, loan term, and interest rate) averaged across all purchasers of that make. Estimated monthly payment as a percentage of monthly income is the calculated monthly payment divided by borrower self-reported monthly income (data is available in ranges of $50, so the midpoint was used for this estimate), averaged across all purchasers of that make.

[1] Our samples of some other, potentially comparable luxury brands were too small to confidently assess. These included Aston Martin, Maserati, Lotus, Genesis and Bentley.

[2] Our sample of Smart, a potentially comparable brand, was too small to confidently assess.