How Much Should I Spend On A Car

Knowing how much you should spend on a car is an age old question and one that we re going to address today with the 10 rule.

How much should i spend on a car. The exact amount you should spend on a car will vary significantly based on your financial situation. A two year old honda civic costs less than a two year old audi a3. Keep reading for the answer. You also have to consider the make and model of a vehicle.

Average cost of a car. However because a vehicle is a depreciating asset you should generally never spend more than about 15 of your gross income on a car. There is no right answer and there is no wrong answer. If you re super cautious you may want to stick to no more than 10 of your income.

When you re trying to figure out how much to spend on your new car there are some rules you can follow. That s a big range we know so if we had to set a rule it would be this. Many buyers first decide on the car they want and let that dictate a monthly car payment or they let a car dealer help them determine how much they can afford. So if you make 40 000 per year you don t want to spend more than about 4 000 on a car.

Your dti represents the percentage of your monthly gross income that s used to pay off debts. But if you can get your car payment even lower so much the better. The amount you should spend on a new car largely comes down to your finances and your personal tastes but some experts suggest that you should aim to spend approximately one third of your income on debt repayment including car loans. New cars take a much larger depreciation hit than used ones.

According to the 36 rule it isn t wise to spend more. Much of the discussion about how much you should spend on a used car surrounds the age of a vehicle. By playing with the numbers a skilled salesperson can craft a car loan that has. However some upscale car models depreciate faster than the depreciation rates of more affordable vehicles which means.

The average price of a new car is 31 000 while the average price of a used car is 19 700. Both are horrible ways to decide how much you should be paying. The exact amount that you should spend on a car might change depending on who you ask. So how much should you spend on a car.

How much should you spend on a car. The 36 dti rule is a good one to limit yourself by. At the end of the day you have to make a. For our example 100 000 family that means you shouldn t spend more than 10 000 per year total on car costs.

If you search online you ll find many different opinions on how much you should spend on a car. Spend no more than 35 percent of your pre tax annual income on a car. Assuming you have no other debt and make 3 500 a month this means that you could spend up to 1 155 on car. Some experts recommend that car buyers follow the 36 rule associated with the debt to income ratio dti.

In fact some experts even say to keep your total car cost including your other car ownership expenses to just 10 of your income. But there s more to consider than just the cost. Probably not as much as you might think.