What is a normal car loan payment?
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.
A good rule of thumb is to spend no more than 10% of your take-home pay on a car loan payment when possible.
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.
Loan Amount | Loan Term (Years) | Estimated Fixed Monthly Payment* |
---|---|---|
$15,000 | 3 | $463.09 |
$15,000 | 5 | $311.30 |
$20,000 | 3 | $617.45 |
$20,000 | 5 | $415.07 |
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.
you comfortably afford under an 80 000 salary. a volkswagen golf gti audi a3 a toyota. avalon the kia stinger and the cadillac ct4.
If you make a $50,000 gross salary, after taxes (depending on where you live) your monthly take-home pay is roughly $3,230. Based on the 10% rule, you could afford, at most, a $323 monthly car payment. If you take out a 60 month (5 year) auto loan at 8% interest, you can afford a $17,000 car.
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.
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.
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.
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%.
A $20,000 loan at 5% for 60 months (5 years) will cost you a total of $22,645.48, whereas the same loan at 3% will cost you $21,562.43. That's a savings of $1,083.05. That same wise shopper will look not only at the interest rate but also the length of the loan.
Company | Used APR Range | Used Loan Terms |
---|---|---|
PenFed Best Overall | 6.49%–17.99% | 3–7 years |
AUTOPAY Best for Bad Credit/Low Rates | As low as 5.69% | 2–8 years |
Consumers Credit Union Best Credit Union | As low as 6.84% | 36–84 months |
LendingTree Best for Refinance | As low as 5.99% (Refinance) | 36–72 months (Refinance) |
Based on the 20/4/20 rule, with an average interest rate, you can afford a $19,000-20,000 car on your $70k salary.
Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses. These expenses include any money you put towards your new vehicle, including gas, insurance, and loan payments.
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.
For net monthly income, you're gonna need to make four thousand. six hundred and sixty seven dollars per month. So before taxes and other deductions, at a minimum. you'll need to make 70 thousand dollars per year. to afford a 40 thousand dollar car.
One school of thought holds that all your automotive expenses — gas, insurance, car payments — should not exceed 20% of your pretax monthly income. Other experts say that a vehicle that costs roughly half of your annual take-home pay will be affordable.
I personally would not spend more then a third to half of what your yearly salary is. So a $40,000 vehicle would be the low and recommended while $60k is the highest. That still puts you in the territory of an Audi S4 or similar vehicle. But don't go out buying GTRs or Ferrari Californias.
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 like gas, insurance, repairs and maintenance.
How much can I spend on a car if I make 55k a year?
Annual salary (pre-tax) | Estimated monthly car payment should not exceed |
---|---|
$25,000 | $208 per month |
$50,000 | $416 per month |
$75,000 | $625 per month |
$100,000 | $833 per month |
To afford this, you would need to have a gross income of at least $53,666.67 per year. Unless you use a different financing method like a Savings Club. You would get a lower rate for the same length of the term and be able to afford the vehicle more comfortably.
The most common car loan terms are: 36 months (three years) 48 months (four years) 60 months (five years)
If you were single, without a mortgage or family to look after, you could probably find a way to own a 250k car when your income was $150k or more. It would be hard work. You'd have to save for a long time and then perhaps finance 50% of it. But you could do it.
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.
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