When it's time to buy a car, you'll probably want to know: “How much car can I afford?” Financial experts answer this question by using a simple rule of thumb: Car buyers should spend no more than 10% of their take-home pay on a car loan payment and no more than 20% for total car expenses, which also includes things ...
Whether you're paying cash or financing, the purchase price of your car should be no more than 35% of your annual income. If you're financing a car, the total monthly amount you spend on transportation – your car payment, gas, car insurance, and maintenance – should be no more than 10% of your gross monthly income.
Some financial experts recommend setting your car-buying budget at half of your annual salary. If you look at the previous example of making $5,000 monthly, that will equate to an annual salary of $60,000. Half of that is $30,000. According to this rule, you can spend up to $30,000 on your upcoming car purchase.
New Car Buying Tips & Advice
Depends on your definition of “afford”. The average person at my store that buys a $40k car makes $100k-$120k per year household income. They generally lease or finance the vehicle. I do have some customers that make $80k buying a $40k car but that is uncommon.
How much car can I afford on a $50,000 salary? On a $50,000 salary, it is recommended you don't spend more than $5,000 (10%) on a car. Dave Ramsey recommends spending no more than half your gross annual income ($50k) on a new car.
While many pundits say you should have a down payment of at least 20% of the vehicle's purchase price, that isn't always necessary — or possible. On a $30,000 loan, that would require a $6,000 down payment. Lenders won't disqualify you if you can't reach that amount, but the closer you get to it, the better you'll be.
A household making $200,000-$250,000 a year in income should be driving an Accord. WHAT?!! To save others from making this costly mistake, I came up with the 1/10th rule for buying a car. It's simple: Spend no more than 10% of your gross annual income on the purchase price of a car.
A 15k car with your income is absolutely reasonable. ... If you go shopping at dealers for a 2-4 year old "certified pre-owned" car you might find the prices to be as high as a new car.
The frugal rule: 10% of income
If you earn $80,000, that's a used car for around $10,000 or $12,000.
Tips for negotiating the price of a new car
$50,000 is a lot of money to borrow. A bank will usually limit a loan based on your debt-to-income ratio. If you are currently debt free with a good credit rating, the minimum income needed to purchase that Tesla would be no less than $3K/month gross.
Yet No Comments