How much should I spend monthly on a car?

Calculate the car payment you can afford

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recommends spending no more than 10% of your take-home pay on your monthly auto loan payment. So if your after-tax pay each month is $3,000, you could afford a $300 car payment.

How much does the average person spend on their car a month?

In 2021, the average car costs $42,258 with an average payment of $563 per month, according to data from Kelley Blue Book and LendingTree. Beyond the sticker price and payments, however, there are the costs of gas, insurance, oil changes and other expenses car owners need to consider.

How much should I make a month for a car?

No More Than 15 Percent of Your Monthly Take-Home Pay

Multiply the total take-home pay by 15 percent, and you'll have an annual car budget of $6,353. That works out to $529 per month.

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

It's simple: Spend no more than 10% of your gross annual income on the purchase price of a car. Why? Because the upfront cost of a vehicle isn't going to be the only thing you pay for, and cutting down your base price budget is the most effective way to save money.

Is 500 a month alot for a car?

The average new car payment in America has crept above the $500 per month mark for the fist time, settling in at $503, according to a recent study by Experian. And if that weren't bad enough, the average length of a car loan now stands at 68 months.

How Much Car Can I Afford (20/4/10 Rule)

Is $400 a month good for car payment?

The result is that the car will be a lot more expensive in the end. In the example we've given, a car payment of $400 per month for five years (60 months) equates to $24,000. But the same $400 per month spread out over six years (72 months) is $28,800, while it's $33,600 over seven years (84 months).

Is $600 a month too much for a car?

How much should you spend on a car? If you're taking out a personal loan to pay for your car, it's a good idea to limit your car payments to between 10% and 15% of your take-home pay. If you take home $4,000 per month, you'd want your car payment to be no more than $400 to $600.

What car can I afford with 75k salary?

If you make $75,000 per year, your total loan payments shouldn't exceed $2,250 per month. The 20/4/10 rule: Put down 20% on a car, finance the car for no more than 4 years, and keep your car payment less than or equal to 10% of your salary.

What car can I afford on 60k salary?

It's typically recommended that you buy a car worth no more than 35% of your gross annual income— so if you make $60k per year, you can afford a new car that is worth $21,000 or less.

Can I afford a 50k car?

How much car can I afford if I make $50,000? While it depends on factors like your credit score, loan terms, down payment and any potential trade-in value, you may find that a vehicle in the $20,000 to $35,000 range will fit your budget.

How much should a teenager save for a car?

It's generally suggested that parents cap their spending limit at around $10,000 for their teen's first vehicle, and most stick to used ones. If you stick to this guideline, then the most you need to save is around $2,000.

How much car can I afford on 40k a year?

Whether you're paying cash, leasing, or financing a car, your upper spending limit really shouldn't be a penny more than 35% of your gross annual income. That means if you make $36,000 a year, the car price shouldn't exceed $12,600. Make $60,000, and the car price should fall below $21,000.

How can I save for a car at 17?

How much should you spend on a first car?

Experts recommend that you spend $5,000 to $10,000 on your first car. But honestly, it all comes down to what you can afford. Here are a few simple tips to help you calculate a figure that would work well for you: Don't spend more than 15% of your gross pay or 20% of your take-home pay.

How much is too much for a car?

Financial experts say to not spend more than 35% of your annual income on the car itself and the costs that come with your purchase. Below you'll find a breakdown of what to consider when buying a new or used car and how much you should spend.

What is the average cost of owning a car?

Here are the highlights from our latest study: Overall, the average annual cost of new vehicle ownership climbed to $9,282, or $773.50 a month. That's an increase of $433 – or nearly 5% – from last year.

Is 60k a year good salary?

According to the Bureau of Labor Statistics, a 60k annual income is the median US income. This means that half of all workers in the US make more than 60k per year, and half make less. However, 60k per year is generally considered to be a good salary.

What is the 50 30 20 budget rule?

Senator Elizabeth Warren popularized the so-called "50/20/30 budget rule" (sometimes labeled "50-30-20") in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings.

How much does Dave Ramsey say you should spend on a car?

As a general rule of thumb, the total value of your vehicles (anything with a motor in it) should never be more than half of your annual household income. Dave doesn't recommend buying a new car—ever—until your net worth is more than $1 million.

How much should my car payment be if I make 70k?

The 10% rule works on the basis that you should not spend more than 10% of your salary per year on car payment. With an annual income of $70k, you should aim to spend no more than $7k per year on car payments.

How much should I spend on a car if I make 80000?

The frugal rule: 10% of your income

For many people, I think that will be between 10–15% of their income. So if you earn $25,000 a year, that's going to be a high-mileage used car for $2,500–$3,000. If you earn $80,000, that's a used car for around $10,000 or $12,000.

How much should I put down on a 70k car?

You should also attempt to make a down payment of at least 20%. This will reduce the amount of interest you pay over the loan, as well as increase your chances of getting approved for the car loan.

Is $800 a lot for a car payment?

Experts say your total car expenses, including monthly payments, insurance, gas and maintenance, should be about 20 percent of your take-home monthly pay. For non-math wizards, like me – Let's say your monthly paycheck is $4,000. Then a safe estimate for car expenses is $800 per month.

Is it better to pay car in full or monthly?

Paying cash for your car may be your best option if the interest rate you earn on your savings is lower than the after-tax cost of borrowing. However, keep in mind that while you do free up your monthly budget by eliminating a car payment, you may also have depleted your emergency savings to do so.

What cars can I afford on my salary?

Financial experts say your car-related expenses shouldn't exceed 20% of your monthly take-home pay. So, let's say you bring home about $2,500 each month. The total amount you should spend on your car — including loan payment, gas, insurance and maintenance — is right around $500.