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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 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.

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

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.

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.

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**.

The lowest amount you can finance a car for may be **$5,000 if you have bad credit**, but there are ways you can make the overall cost of any loan more affordable. It may take some time and planning, but it's worth it if you want to finance the lowest amount possible.

**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.

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).

For $40,000 loans, monthly payments averagely range **between $900 and $1,000**, depending on the interest rate and loan term.

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.

Calculate the car payment you can afford

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.

“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.

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.

**2020 Hyundai Sonata**. The 2020 Hyundai Sonata is one of the midsize cars you can afford if you pull down a $50K salary. With good credit, the $390 monthly payments are affordable for those in that salary range.

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.

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.

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.

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.

- Renegotiate your loan terms. Lenders often allow you to defer a payment when you're facing financial hardship. ...
- Refinance your car loan. There are two ways refinancing your car loan can help lower your monthly payment. ...
- Sell or trade in your car. ...
- Make extra payments when possible.

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.

With a loan amount of $30,000, an interest rate of 8%, and a loan repayment period of 60-months, your monthly payment is **around $700**. Before you purchase your new vehicle, remember to budget for car maintenance, gas, and car insurance.

Using the formula above, you can estimate your monthly payment for various loan terms to be: **12 months: $1269.25**. 24 months: $643.99. 36 months: $435.49.