# Is 400 a month too much for a car?

Asked by: Mia Schimmel  |  Last update: October 5, 2023

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.

## Is \$400 a month for a car a lot?

The result is that the car will be a lot more expensive in the end. In the example we've given, a car payment of \$400 per month for five years (60 months) equates to \$24,000. But the same \$400 per month spread out over six years (72 months) is \$28,800, while it's \$33,600 over seven years (84 months).

## How much is too much for a monthly car payment?

NerdWallet recommends spending no more than 10% of your take-home pay on your monthly auto loan payment. So if your after-tax pay each month is \$3,000, you could afford a \$300 car payment.

## Is \$500 a month a lot for a car payment?

The average new car payment in America has crept above the \$500 per month mark for the fist time, settling in at \$503, according to a recent study by Experian. And if that weren't bad enough, the average length of a car loan now stands at 68 months.

## 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.

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42 related questions found

### What's a reasonable car payment?

Expert estimates range broadly. Greg McBride, a senior vice president, chief financial analyst at Bankrate.com, advises that a car payment should equal no more than 15 percent of your pretax monthly pay. That means that if you make \$50,000 a year, your monthly car payment could be as much as \$625.

### What is a normal car payment?

The average monthly car payment for new cars is \$648. The average monthly car payment for used cars is \$503.

### What car can I get for 350 a month?

New Cars With Lease Payments Under \$350 a Month
• 2022 Honda Civic. Payment: \$280 / month Lease Term: 36 months MSRP: \$23,645. ...
• 2023 Kia Seltos. ...
• 2022 Honda HR-V. ...
• 2022 Toyota C-HR. ...
• 2022 Mazda Mazda3. ...
• 2022 Mitsubishi Mirage. ...
• 2022 Toyota Corolla Cross. ...
• 2022 Toyota Corolla Hybrid.

### Is paying monthly for a car worth it?

The interest rate is low, so the extra costs won't add much to the overall cost of the vehicle. The regular payments won't add stress to your current or upcoming budget. Low monthly payments will free up funds for your other necessary expenses. You're certain you can and will make the payments on time.

### What car can I afford on 40k salary?

Whether you're paying cash, leasing, or financing a car, your upper spending limit really shouldn't be a penny more than 35% of your gross annual income. That means if you make \$36,000 a year, the car price shouldn't exceed \$12,600. Make \$60,000, and the car price should fall below \$21,000.

### What is the average car payment 2020?

If you're in the market for a new car, you might be asking yourself — how much is the average car payment? Experian reports that, as of the second quarter of 2020, new vehicle owners paid an average of \$568 a month on their vehicles, while used car owners paid \$397.

### How much money should I spend on my first car?

Experts recommend that you spend \$5,000 to \$10,000 on your first car. But honestly, it all comes down to what you can afford. Here are a few simple tips to help you calculate a figure that would work well for you: Don't spend more than 15% of your gross pay or 20% of your take-home pay.

### Is it better to pay car in full or monthly?

Paying cash for your car may be your best option if the interest rate you earn on your savings is lower than the after-tax cost of borrowing. However, keep in mind that while you do free up your monthly budget by eliminating a car payment, you may also have depleted your emergency savings to do so.

### Why are car payments so high?

Brian Moody, executive editor for Kelley Blue Book, told ABC News that a low supply of cars and high demand from buyers means consumers "are going to be paying more" than the MSRP.

### Is \$300 a month a good car payment?

When browsing your options, keep in mind that financial experts will typically tell you to spend less than 10% of your monthly take-home pay on your car payment. That means if your take-home pay is \$3,000 a month, plan to spend no more than \$300 on your car payment.

### What car can I afford with 60k salary?

It's typically recommended that you buy a car worth no more than 35% of your gross annual income— so if you make \$60k per year, you can afford a new car that is worth \$21,000 or less.

### How expensive of a car should I buy?

To save others from making this costly mistake, I came up with the 1/10th rule for buying a car. It's simple: Spend no more than 10% of your gross annual income on the purchase price of a car.

### How much is a 20k car payment?

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.

### How much would a 30000 car cost per month?

A \$30,000 car, roughly \$600 a month.

### What's the average monthly car payment in America?

Car prices have skyrocketed since the Covid-19 pandemic began, causing the average monthly car payment for a new car to jump 11% to \$644 in the fourth quarter of 2021 compared to a year earlier, according to a report from Experian.

### How long should I pay for a car?

The typical car loan length is 6 years. But with a 7- or 8-year loan, not only will you still be making payments at the loan's end, but you might also be paying to make repairs to the car.

### Are cars a waste of money?

It's the single worst financial decision millennials will ever make.” That's because the moment you drive it off the lot, the vehicle starts to depreciate: Your car's value typically decreases 20 to 30 percent by the end of the first year and, in five years, it can lose 60 percent or more of its initial value.

### How much should a teen's first car cost?

It's generally suggested that parents cap their spending limit at around \$10,000 for their teen's first vehicle, and most stick to used ones. If you stick to this guideline, then the most you need to save is around \$2,000.