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.
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.
The pandemic and resulting supply-chain issues, inflation, rising interest rates all play a part. Depending on whom you ask, the average car buyer in the U.S. is paying $657 (Edmunds.com) or $712 (Moody's) a month for their new vehicles.
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.
The average monthly car payment for new cars is $648. The average monthly car payment for used cars is $503.
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.
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.
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.
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.
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.
How much car can I afford if I make $50,000? While it depends on factors like your credit score, loan terms, down payment and any potential trade-in value, you may find that a vehicle in the $20,000 to $35,000 range will fit your budget.
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.
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.
For $40,000 loans, monthly payments averagely range between $900 and $1,000, depending on the interest rate and loan term.
A $30,000 car, roughly $600 a month.
In most cases, when you see someone driving a new car, they're either leasing it or they took out an auto loan to purchase it. In either case, they are making monthly payments on their new car. Sure, there are a select few individuals that actually pay cash for a brand new 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.
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.
“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.
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.
If you make $75,000 per year, your total loan payments shouldn't exceed $2,250 per month. The 20/4/10 rule: Put down 20% on a car, finance the car for no more than 4 years, and keep your car payment less than or equal to 10% of your salary.
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.
How much money does the average American owe? According to a 2020 Experian study, the average American carries $92,727 in consumer debt. Consumer debt includes a variety of personal credit accounts, such as credit cards, auto loans, mortgages, personal loans, and student loans.
Many people would likely say $30,000 is a considerable amount of money. Paying off that much debt may feel overwhelming, but it is possible. With careful planning and calculated actions, you can slowly work toward paying off your debt.