How Much Should I Pay?
According to the 36% rule, it isn’t wise to spend more than 36% of your income on loan payments, including car payments.
Another rule of thumb says that drivers should spend no more than 15% of their monthly take-home pay on car expenses.
How much does a decent used car cost?
When shopping for a used car for $2,500 or less, these search terms will give you the best possible results: Price: Set the maximum to $3,500. You can bargain some sellers down into your price range.
Can I afford a car payment?
Aim to spend less than 10% of your take-home pay on your car payment and less than 15% to 20% on car expenses overall. Once you know the monthly car payment you can afford, you can calculate how much you can afford to borrow for your car loan.
How much should my monthly car payment be?
It all starts with what we call the 20/4/10 rule, which says you should: Make a down payment of at least 20%. Finance a car for no more than four years. And not let your total monthly vehicle expense, including principal, interest and insurance, exceed 10% of your gross income.
Photo in the article by “JPL – NASA”