With no other bills, you can afford a $40k car with a yearly income of $12,000. But if you do have other bills ( ie wife and children and a mortgage and student loans) then consider your bills and decide if you can afford a new car. In my opinion it would be insane to spend more than 10% of your wealth on a car.
Yes, $40k by all means is expensive. Considering the per capita income in USA is $51.5K and in Canada its $50k, its above 80% of average income for most of the people.
'Never spend more than this much of your income on a car,' says millionaire finance expert - 10% of gross salary - Someone earning 500k a year can afford a 50k car.
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 the 50-20-30 rule? The 50-20-30 rule is a money management technique that divides your paycheck into three categories: 50% for the essentials, 20% for savings and 30% for everything else.
A $30,000 car, roughly $600 a month.
So, to afford a $60,000 new car, you need to make around $90,750 a year.
Because the upfront cost of a vehicle isn't going to be the only thing you pay for, and cutting down your base price budget is the most effective way to save money. If you make the median per capita income of about $42,000 a year, for example, you should limit your budget to $4,200.
While it's easy to think that millionaires all drive sports cars and live in huge mansions it's just not true. 81% of millionaires purchase their vehicle and only 23.5 percent actually buy new cars. They understand that cars are depreciating assets, especially brand new ones.
Nothing is too much for a car if you are passionate about it. You might think of using the 35000 in other useful ways or invest it.
Ergo, buying a car is a waste of money. While it is true that once a car is registered for the first time, it becomes a used car and is worth less money, very few people buy a new car and immediately sell it. If you keep a car for a number of years, the depreciation will even out with time.
The frugal rule: 10% of income
So if you earn $25,000 a year, that's going to be a high-mileage used car for $2,500–$3,000. If you earn $80,000, that's a used car for around $10,000 or $12,000.
But for the majority of America's wealthiest people, the popular trend is to go with a mainstream car. According to Dave Ramsey, about 61 percent of America's wealthiest people actually drive Hondas, Toyota, and Fords.
People in wealthier states prefer iPhones over Samsung Galaxy phones. If you live in a higher-income state, it's likely you own an iPhone. That's according to new data out from internet marketing company WebpageFX, which analyzed data from 30 million mobile device users.
An Experian Automotive study found that 61% of wealthy people drive Toyotas, Hondas and Fords. In addition to being attracted to cars made by Honda, Toyota, and Ford, other brands to include in the list for rich people are Jeep, Subaru, and Volkswagen.
For $40,000 loans, monthly payments averagely range between $900 and $1,000, depending on the interest rate and loan term. With an interest rate of 6% and a down payment of $2500, your monthly payment for a $450,000 car loan over a term of 72 months will be $7,859 per month.
A $500 car payment is about average right now. The concept of “too much” is going to depend on your income and living expenses, your insurance expense, and other budget factors.
“A typical down payment is usually between 10% and 20% of the total price. On a $12,000 car loan, that would be between $1,200 and $2,400. When it comes to the down payment, the more you put down, the better off you will be in the long run because this reduces the amount you will pay for the car in the end.
How much should you spend on a car? If you're taking out a personal loan to pay for your car, it's a good idea to limit your car payments to between 10% and 15% of your take-home pay. If you take home $4,000 per month, you'd want your car payment to be no more than $400 to $600.
According to experts, a car payment is too high if the car payment is more than 30% of your total income. ... Make sure your car payment does not exceed 15%-20% of your total income. This will ensure you have enough cash in hand to make payments for other loans, utility bills, and household expenses.
So, theoretically, if your salary is $50,000 you could afford a car payment of $430 or less. With a $100,000 salary, you could afford a mortgage payment of no more than $2,500. For those with a salary near $30,000 your home, car, and debt combine should be no more than $1,250 per month.
For instance, using our loan calculator, if you buy a $20,000 vehicle at 5% APR for 60 months the monthly payment would be $377.42 and you would pay $2,645.48 in interest.
If you're buying a $30,000 car and make a 10% down payment, the down payment would be $3,000 at the time of sale. ... As a general rule, aim for no less than 20% down, particularly for new cars — and no less than 10% down for used cars — so that you don't end up paying too much in interest and financing costs.
When it comes to a down payment on a new car, you should try to cover at least 20% of the purchase price. For a used car, a 10% down payment might do.
That gives a whole new meaning to the idea of “the millionaire down the street,” doesn't it? The top 10 cars for $250,000-plus households include the Mercedes E-class, the Lexus RX 350 and the BMW 5 series and 3 series. Following those top four were three Hondas, a Toyota, an Acura and a Volkswagen.