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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**.

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.

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 general rule is that your payment will drop about **$20 a month** for every $1,000 you put down, based on a 5% APR, but this is subject to individual situations and loan terms. A larger down payment also helps you build equity faster and protects you and the lender against depreciation and potential loss.

**A down payment of 20% would be great, but anything above the minimum helps**. Putting more money down helps you save money in the long run. Not only does it lower your monthly payment, it helps you save money in interest charges.

“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.

A good rule of thumb for a down payment on a new car loan is **20% of the purchase price**. A down payment of 20% or more is a way to avoid being “upside down” on your car loan (owing more on the car than it's worth).

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**.

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.

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.

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.

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

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.

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.

**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.

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.

**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.

A down payment **between 10 to 20 percent of the vehicle price** is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan. By dropping the amount financed, you save some even before you start negotiating the car price.

With a three-year $10,000 loan at a 4.5% interest rate, your monthly payments would be **$297 per month** or more if you include the sales tax in the loan.

- 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.

Minimum Down Payment Requirements

When you're dealing with poor credit, the smallest down payment you can typically make is **10% of the vehicle's selling price or at least $1,000**.

If your credit score isn't good, however, **you're typically required to make a down payment of at least $1,000 or 10% of the vehicle's selling price**. This varies by lender, and some may accept the lesser amount. On a $20,000 car, that would be up to $2,000 down.

It can't be stopped but making a large down payment gives you a cushion between the value of the car and the amount you owe on the loan. **If your loan amount is higher than the value of your vehicle, you're in a negative equity position, which can hurt your chances of using your car's value down the road**.