# Is 400 too much for a car payment?

Asked by: Fatima Cruickshank  |  Last update: September 2, 2022

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).

## 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.

## How much is too high of a car payment?

According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.

## What is a reasonable monthly 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.

## How Much Car Can I Afford (20/4/10 Rule)

28 related questions found

### 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 is the average car payment in 2021?

The average monthly car payment was \$644 for a new vehicle and \$488 for used vehicles in the U.S. during the fourth quarter of 2021, according to Experian data. The average lease payment was \$531 a month in the same period.

### 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.

### Why is my car payment so high?

Interest rate

Your monthly car payment serves to pay down the loan's principal, as well as interest and fees. The higher your interest rate, the higher your monthly payment will be.

### 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.

### How much car debt is too much?

Most lenders say a DTI of 36% is acceptable, but they want to loan you money so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you are carrying too much debt. Others stretch the boundaries to the 36%-49% mark.

### Is 550 a good car payment?

With a credit score of 550, you're in the subprime tier, which means you're going to have a higher interest rate. In general, expect lenders to offer a car loan with an interest rate of 15% to 20% depending on the length of your loan—and that's if they approve you at all.

### What car can I buy for \$400 a month?

Models Between \$300 and \$400 a Month
• 2022 Chevrolet Trax. View Trax Trims. ...
• 2022 Chevrolet Trailblazer. View Trailblazer Trims. ...
• 2022 Hyundai Kona. View Kona Trims. ...
• 2022 Hyundai Elantra. View Elantra Trims. ...
• 2022 Toyota Corolla. View Corolla Trims. ...
• 2022 Subaru Impreza. ...
• 2022 Nissan Sentra. ...
• 2022 Toyota Corolla Hatchback.

### 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.

### 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 would a 30000 car cost per month?

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

### How much money should I spend on a car?

Financial experts generally recommend capping auto payments and related expenses at 10%–15% of monthly income. Beyond the sales price, buyers should also budget for other expenses like repairs, registration, and insurance.

### 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 should I spend on a car if I make \$60000?

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.

### Is 900 a month too much for a car?

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.

### How much car can I afford based on salary?

Financial experts say your car-related expenses shouldn't exceed 20% of your monthly take-home pay. So, let's say you bring home about \$2,500 each month. The total amount you should spend on your car — including loan payment, gas, insurance and maintenance — is right around \$500.

### What is the average car payment in 2022?

Average monthly car payment

By the beginning of 2022, the U.S. saw the nationwide average car payment reach \$648 for new vehicles. This was a 12.31% increase from the previous year — and it will likely continue to inflate further due to rising average car prices and the overall rise of inflation.

### Do car dealers prefer cash or finance?

In most cases, car dealerships that are focused on the sale of their offered vehicles are the ones that tend to prefer cash because it's a quick way to close the deal. Sellers that prefer cash-based transactions usually offer discounts or other promotions that are not available to credit payments.

### What is a healthy amount of debt?

Key Takeaways. In order to keep your debt load under control, a household may look to the so-called 28/36 rule. The 28/36 rule states that no more than 28% of a household's gross income be spent on housing and no more than 36% on debt service.