Is $500 a month a high car payment? (2024)

Is $500 a month a high car payment?

An affordable car payment would be one that doesn't exceed $600 a month, based on the rule of thumb that your car payment shouldn't be more than 15% of your take-home pay. If you take out a 60-month car loan at 8% APR, you should aim to take out a car loan of less than $30,000.

Is 500 a month car payment a lot?

The average monthly car payment is now a record $733, according to Edmunds. And even if your monthly auto loan payments are around $500 per month, that still may be uncomfortably high. And that's before adding up the cost of maintenance, fuel, and auto insurance.

What is considered a high car payment?

According to our research, you shouldn't spend more than 10% to 15% of your net monthly income on car payments. Your total vehicle costs, including loan payments and insurance, should total no more than 20%.

Is 500 dollars a good down payment for a car?

3) The Right Amount

Putting $500 of money down may get you approved, but it will not take you far. You will be faced with a big loan amount. The appropriate amount of down payment will differ from lender to lender. However, you should at least put down $1000 or 20% of the car's value.

How much should I spend on a car if I make $100000?

Starting with the 1/10th guideline, created and pushed by Financial Samurai, this guideline states: buy a car in cash that costs less than 1/10th your gross annual pay. If you make $50,000 you should buy a car in cash worth $5000. If you make $100,000, the car you buy should be worth no more than $10,000.

What is a reasonable monthly car payment?

In general, it's recommended to spend no more than 10% to 15% of your monthly take-home income on your car payment, and no more than 20% on your total vehicle expenses, including insurance and registration. Read on to learn how you can determine how much car you can afford based on your financial situation.

What is an acceptable monthly car payment?

Financial experts recommend spending no more than 10% of your monthly take-home pay on your car payment and no more than 15% to 20% on total car costs such as gas, insurance and maintenance as well as the payment. If that leaves you feeling you can afford only a beat-up jalopy, don't despair.

What is a normal car payment?

Car payment statistics

The average monthly car payment for new cars is $726. The average monthly car payment for used cars is $533. 39.20 percent of vehicles financed in the third quarter of 2023 were new vehicles. 60.80 percent of vehicles financed in the third quarter of 2023 were used vehicles.

Is $1,000 car payment too much?

For large luxury models, $1,000-plus payments are the norm. Even a handful of buyers with subcompact cars have four-figure payments, likely due to having shorter loan terms, poor credit, and still owing money on previous car loans, according to Edmunds analysts.

Is $750 a high car payment?

But no matter the reason for your $750 monthly car payment, the reality is that it's a lot of money. And if you're going from having no car payment to a payment of $750 a month, it could really constitute a shock to your finances. Here are a few steps you can take to cope with such a large car payment.

What is a good down payment on a $25000 car?

How much should you put down on a $25,000 car? For a $25,000 car, consider putting down at least $2,500 if it's used or at least $5,000 if it's new. By putting 10% or 20% down depending on the car's condition, you'll have the best options for loan terms and interest rates.

Is $2,000 a good downpayment for a car?

A good rule of thumb for a down payment on a new car loan is 20% of the purchase price. A down payment of 20% or more is a way to avoid being “upside down” on your car loan (owing more on the car than it's worth).

Is it worth it to put a down payment on a car?

Down payments reduce the amount money you must borrow, and thus the interest you pay while repaying your car loan. Experts recommend a down payment of at least 20 percent. Larger down payments may prevent becoming upside-down on your loan.

Is $600 a month a lot for a car?

As a general rule, it's recommended that your monthly car payment not exceed 20% of your take-home pay. So, if your monthly take-home pay is $3,000, your car payment should be no more than $600.

What is the rule of thumb for car payments?

As a general rule of thumb, many experts suggest following the 20/4/10 rule, which holds that you should set aside 20% of a car's purchase price for a downpayment, take 4 years to repay your car loan, and ensure that your monthly transportation costs don't exceed 10% of your monthly income.

What is the 50 30 20 rule?

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.

How do people end up with high car payments?

Your monthly car loan payment is largely affected by your loan amount, interest rate and loan term. Your credit, debt and income can play a key role in determining your overall loan cost, so it's important to know your current credit and take steps to improve it, if necessary.

Is $300 a month good for a car payment?

NerdWallet 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. Check if you can really afford the payment by depositing that amount into a savings account for a few months.

What is the 20 4 10 rule?

20% down — be able to pay 20% or more of the total purchase price up front. 4-year loan — be able to pay off the balance in 48 months or fewer. 10% of your income — your total monthly auto costs (including insurance, gas, maintenance, and car payments) should be 10% or less of your monthly income.

How much should I spend on a car if I make $40 000?

The 35% rule states that the most that you should spend. on the price of a car. is not to exceed 35% of your gross income. That means if you make $40,000 a year, the cars price should not exceed $14,000. If you make $80,000, the cars price should be below $28,000.

Why are car payments so high?

The Fed has raised interest rates to cool the economy.

This means that you're spending more money on your monthly loan payments, since you're paying more in interest. With many of these auto loans starting at 6%, it's no secret as to why car payments are up.

Do most families have 2 car payments?

Most families have two cars, so it's not unusual to need two car loans. But having two loans can put a strain on your budget. Before you apply for a second loan, make sure you can afford the monthly payment. Lenders only approve you if your income and debt can handle the added expense.

How much is a $20,000 car payment?

What percent of Americans have a car payment?

About 43% of Americans take out loans to pay for their cars. The total amount of outstanding auto loans in the US exceeded $1.2 trillion in Q1 2020. In Q1 of 2020, the proportion of overall delinquent auto loans was 4.71%.

How much should I spend on a car if I make $60000?

How much should I spend on a car if I make $60,000? If your gross salary is $60,000, your take-home monthly pay is probably around $3,750, assuming about 25% of your pay goes toward taxes and other expenses. Based on the 10-15% calculation, you should spend no more than $562.50 on a monthly car payment.