It depends on how much income you have after your bills and expenses. As a rule of thumb, your car payment should not exceed 15% of your post-tax monthly pay. For example, if you make the U.S. median annual income of $62,1920 after taxes, you could shop for a car that costs up to $606 per month.
Financial experts recommend keeping your monthly transportation costs to 10% to 15% of your income. That includes your auto loan payment, fuel costs, insurance premiums, maintenance and repairs. If you're planning to buy a car soon, here are some guidelines to help you find the right budget for your monthly payment.
One rule of thumb is to spend no more than 10% of your take-home pay on a monthly car payment. So do the math. If your after-tax pay each month is $3,000, you might be able to afford a $300 car payment.
Probably not. Assuming you could get a monthly payment on a car for less than $300 a month that's probably going to lock you in for like 72-84 months plus a high interest rate. You're probably saving money without the car note. Start saving up to buy a car in cash. Edit: car insurance is also a hefty expense.
As a general guideline, your car loan payments should be less than 10 to 15 percent of your take-home pay each month.
How much would a $30,000 car cost per month? This all depends on the sales tax, the down payment, the interest rate and the length of the loan. But just as a ballpark estimate, assuming $3,000 down, an interest rate of 5.8% and a 60-month loan, the monthly payment would be about $520.
Buying a used car for less than $10,000 can get you behind the wheel of a reliable and good-looking ride without costing you a fortune. However, you must prepare for potential repairs that can empty your wallet even though you might not break the bank with upfront costs.
If your gross salary is $60,000, your take-home monthly pay is probably around $3750, assuming about 25 percent of your pay goes toward taxes and other expenses. Based on a calculation of spending 10–15 percent of your monthly pay on a car loan, you should spend no more than $562.50 on your monthly car payment.
South Africa's cheapest cars
There's no universal minimum score that acts as a cut-off point for car loans. However, there is a minimum credit score that generally indicates strong creditworthiness and low risk to lenders. This number can vary slightly depending on the source, but it lands somewhere in the 630-660 range.
A $20,000 loan at 5% for 60 months (5 years) will cost you a total of $22,645.48, whereas the same loan at 3% will cost you $21,562.43.
Better interest rate: A 60-month loan will typically have a lower interest rate than a 72-month loan because the risk for lenders isn't as high. (Lenders consider long-term loans to be riskier because the longer it takes to pay off the loan, the more opportunity exists for the loan to not be paid back in full.)
As a general rule, you should pay 20 percent of the price of the vehicle as a down payment. That's because vehicles lose value, or depreciate, rapidly. If you make a small down payment or no down payment, you can end up owing more on your auto loan than your car or SUV is worth.
Pay with cash
Paying for your new or used vehicle in cash eliminates your interest costs and finance fees, which can save you thousands. It also means you will not make monthly car payments, which lowers the “transportation” line item in your monthly budget.
According to auto and financial industry experts, the standard recommended amount is 20% of the sales price for a new car, or at least 10% of the sales price if you're buying a preowned vehicle.
End of the Year: The Ultimate Time to Buy
One of the best times to buy a car is at the end of the year. Dealerships are motivated to meet their annual sales goals, and manufacturers like Ford offer special year-end rebates, incentives, and financing options.
Avis Car Sales Vehicles Under $300/Month
10 Best Used Cars Under $5,000
There is no minimum credit score required to buy a car, but most lenders have minimum requirements for financing. Most borrowers need a FICO score of at least 661 to get a competitive rate on an auto loan.
“Cars, trucks, RVs, boats, and everything that has motors and wheels go down in value,” Ramsey wrote recently. “NEVER finance them, because they go down in value and you get stuck in them. Don't let debt trap you in something that's losing value every day. Save up, pay cash, and own it outright.”
Ultimately, car age and mileage both matter when buying a used car. They both affect the vehicle's depreciation rate and they are both interlinked – mileage is taken as being high or low based on a car's age and the older the car, the more miles it's likely to have driven.
Here's a curated list of 25 used car makes and models that have earned a reputation for their longevity: