What is a good monthly car payment? (2024)

What is a good monthly car payment?

The rule of thumb among many car-buying experts dictates that your car payment should total no more than 15% of your monthly net income, sometimes called your take-home pay (some might stretch this to 20%, but 15% is more conservative and therefore likely to make budgeting even easier).

What is considered a good monthly 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%. You can use a car loan calculator to calculate a monthly payment within your budget.

Is $500 a month a lot for a car?

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.

Is $500 a month too much for a 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 450 a month a lot for a car payment?

Generally, however, a car payment is considered high if it exceeds 10-15% of a person's gross monthly income. This means that if a person earns $3,000 per month, a car payment that is greater than $300-$450 per month may be considered high.

Is $700 a month a lot for a car payment?

The average new car payment has just hit $700 a month, with some paying $1,000. Some ways to lower that price. Remember just a few years ago when a car loan was $300 a month? Now, unless you put down a huge down payment, those days are gone forever.

Is $800 a month a lot for a car payment?

Experts say your total car expenses, including monthly payments, insurance, gas and maintenance, should be about 20 percent of your take-home monthly pay. For non-math wizards, like me – Let's say your monthly paycheck is $4,000. Then a safe estimate for car expenses is $800 per month.

What is the average car payment for 2023?

Visit your My NerdWallet Settings page to see all the writers you're following. The average monthly car loan payment in the U.S. is $726 for new vehicles and $533 for used ones originated in the third quarter of 2023, according to credit reporting agency Experian.

What is the 20 3 8 rule?

And that's why we design the policy, the program where you put 20% down, you don't finance more than three years, and it doesn't exceed 8% of your income. That checks all the boxes. to make sure you're not driving around in a clunker.

What is the 20 4 10 rule?

To apply this rule of thumb, budget for the following: A 20% down payment. Repayment terms of four years or less. Spending less than 10% of your monthly income on transportation costs.

What is a realistic 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.

What is the average American car payment?

Average monthly car payments for new, new leased and used vehicles jump year over year. The average car payment for a new vehicle is $726 monthly, according to third-quarter 2023 data from Experian — up 3.6% year over year.

What is considered expensive for a car?

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 $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.

Why are car payments so high now?

The average car payment for a used vehicle is slightly higher than it was a year ago thanks to this increase in loan rates. There are also ongoing inventory problems in the used vehicle market. Due to pandemic-era supply shortages, fewer new cars were produced and sold from 2020 to 2022.

Can I afford a $500 car payment?

It depends on how much income you have after your bills and expenses. But as a rule of thumb, your car payment should not exceed 15% of your post-tax monthly pay. For example, if after taxes, you make the U.S. median income of $37,773, you could shop for a car that costs up to $472 per month.

Is a $1000 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.

Will car prices drop in 2023?

In 2023, prices are expected to decline by roughly 10% for used cars and by 2.5% to 5% for new cars.

Is it better to split car payment into two payments?

Should I pay my car payment twice a month? Paying half of your monthly car payment twice a month instead of a full payment each month can help you pay off your car loan early. That's because when you make payments on a biweekly basis, you make 26 payments that add up to 13 monthly payments instead of 12.

Is a $600 car payment too much?

According to Consumer Reports, the average monthly payment on a new car loan is $600 — up 25% in the last 10 years. A payment that high can make a serious dent in your budget. Here are some tips to help keep your payments as low as possible.

Can I afford a $700 car payment?

Income: A general guideline is that your car payment should not exceed 15-20% of your monthly take-home pay. If your monthly income comfortably covers the $700 payment along with other essential expenses and savings goals, it may be manageable.

What is the best way to pay for a car?

There are plenty of benefits to paying cash for a new car. Some of these advantages include: Spending less money: When you purchase a car in cash, you avoid paying interest on a loan and other lender fees.

Is 2023 a good year to buy a car?

Car prices were high in 2023, and financing rates were expensive. Buying a car in 2023 wasn't good for many people's personal finances. But will things improve in 2024? Maybe, to some degree.

How much is a $30000 car payment for 5 years?

With a $1,000 down payment and an interest rate of 20% with a five year loan, your monthly payment will be $768.32/month.

What is a good APR for a 2023 car?

In early 2023, average rates for new and used vehicles were 6.58 percent and 11.70 percent, respectively, according to Experian. The third quarter brought similar rates, 7.03 percent for new and 11.35 percent for used.