Question: How Much Car Can I Afford Based On Salary??

Rules of Thumb

The general rule of thumb is that you should not spend more than 20% of your monthly take-home pay on cars, according to Edmunds.com (via Bankrate).

So if your after-tax monthly income is $4,000, your total cost of car ownership for ALL of the cars you own should not exceed $800 under this rule.

How do you determine what car you can 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 like gas, insurance, repairs and maintenance.

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

Most financial experts agree that your car expenses (monthly payment, insurance, fuel, taxes, routine maintenance and so forth) should be no more than 15 to 20% of your net income. In our $3,300 example that works out to a maximum of $500 to $660 per month.

What is the average car payment?

The average monthly car payment on a new vehicle in 2017 was a hefty $479, and as of 2016, the average car loan was a whopping $30,032 with an average length of 68 months — that’s over five and a half years! Interest rates on auto loans are also rising and will cost you well over 4 percent annually on average.

Photo in the article by “Naval History and Heritage Command – Navy.mil” https://www.history.navy.mil/research/library/online-reading-room/title-list-alphabetically/p/pearl-harbor-why-how.html