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Car buyers in many cities may be extended too far

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A new study shows the average household in 24 of America's 25 largest metropolitan areas cannot afford to pay for the average priced new car or truck.

"Just because you can manage the monthly payment doesn't mean you should let a $30,000 or $40,000 ride gobble up such a huge share of your paycheck," said Mike Sante, managing editor of Interest.com. "Many people are spending money on a car payment that they could be saving."

For the second straight year, Interest.com calculated how much the median household in America's largest metro areas could afford to spend every month on car payments and auto insurance.

(Read more: Car buyers commit to longer auto loans)

Once again, Washington D.C. topped the list with the median household being able to afford a maximum monthly payment of $641.

The study showed that Tampa and Miami are the only two cities where car affordability declined over the past year.

The biggest jump was in San Antonio where affordability increased 7 percent compared with last year.

Interest.com makes its calculations assuming buyer's put down 20 percent and take out a 48-month auto loan.

Top 5 metro areas for auto affordability

1. Washington, D.C.

($32,531 affordable purchase price/$641 maximum monthly payment)

2. San Francisco

($28,009 affordable purchase price/$563 maximum monthly payment)

3. Boston

($26,669 affordable purchase price/$520 maximum monthly payment)

4. Minneapolis

($24,846 affordable purchase price/$494 maximum monthly payment)

5. Baltimore

($24,591 affordable purchase price/$479 maximum monthly payment)

Buyers overextended

With the average price paid at dealerships for a new car now topping $32,000, Interest.com says many households in America's largest metropolitan areas cannot afford to spend as much as they do on new cars and trucks.

"I'm concerned the average transaction price is so much higher than the median income for families," said Sante. "Clearly, many people don't have a plan for how much they can spend and afford."

(Read more: Americans rethinking how they buy cars)

The truth is few car buyers put down 20 percent when they buy a new vehicle, and according to Experian Automotive just 4.7 percent of all new car auto loans in the fourth quarter of last year were 37-48 months long. By comparison, a record 20.1 percent of auto loans were between six and seven years long according to Experian.

The rising popularity of longer auto loans is due to new car buyers looking to keep their monthly payments as low as possible.

"You shouldn't borrow for over 48 months or you'll wind up paying for a new car forever," said Sante.

Cities with the lowest affordability

21. Phoenix

($18,199 affordable purchase price/$364 maximum monthly payment)

22. Pittsburgh

($17,965 affordable purchase price/$354 maximum monthly payment)

23. Detroit

($17,352 affordable purchase price/$338 maximum monthly payment)

24. Miami

($15,174 affordable purchase price/$299 maximum monthly payment)

25. Tampa

($14,209 affordable purchase price/$280 maximum monthly payment)

The 20/4/10 rule

Sante believes more American households would have more money to save or spend on something else if they followed the "20/4/10 Rule"

Put down 20 percent.

(Read more: February auto sales beginning to thaw)

Take out an auto loan for no longer than 4 years.

Make sure you spend no more than 10 percent of your monthly gross pay on a car payment and auto insurance.

"You really should have a game plan when you start looking to buy a new car or truck," said Sante. "If you don't you could find yourself spending more than you can really afford."

http://www.interest.com/auto/calculators/auto-loan-calculator/

—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews.

Questions? Comments? BehindTheWheel@cnbc.com.

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