You’ll be better prepared to buy a car if you enter the auto-buying process armed with a few crucial figures. And the math isn’t that complicated. You have fixed expenses like housing, health care, and food in addition to your income. You can buy nice goods like vehicles using the money that is left over after covering those costs.
If you’re wondering how much of your money you can spend on a car, keep the 20% rule in mind. According to financial experts, you shouldn’t spend more than 20% of your monthly income on car-related expenses. Let’s assume that you earn roughly $2,500 every month. You should spend roughly $500 on your automobile in total, including the loan payment, gas, insurance, and maintenance. You shouldn’t have any trouble paying for your ride as long as you abide by these restrictions. If you want to spend a bit more, you can always make savings elsewhere.
However, depending on the expenses you have, everyone has a different budget. Make sure that adding a new auto payment won’t result in added stress by considering your personal budget.
In This Article...
If I earn $100,000, how much should I spend on a car?
The amount of car you can afford isn’t determined by any single fixed rule. Instead, it relies on your level of comfort and personal financial circumstances.
However, some financial gurus have developed some general guidelines. Taking a look at some of them can be beneficial, but be aware that they are somewhat sporadic. Additionally, we’ll offer a more effective strategy in the section following.
% of Your Income Across All Vehicles
Unexpectedly, debt-freedom expert Dave Ramsey has the largest rule of thumb. Ramsey advises that the combined value of all of your vehicles not exceed 50% of your gross income.
That suggests that the cumulative value of all the automobiles for a household making $50,000 shouldn’t exceed $25,000 Similarly, the combined value of all of your vehicles shouldn’t be more than $50,000 if your household makes $100,000 annually.
% Debt-to-Income Ratio
Do you know what a “debt-to-income ratio” is? It’s just a percentage based on how much you make compared to how much money you owe overall. Your debt-to-income ratio is 50% if your total debt is $30,000 and your take-home pay is $60,000.
Many professionals utilize a 36% maximum debt-to-income ratio as a general guideline. But remember, that’s just a suggestion. With a DTI of around 50%, many lenders approve auto loans (and refinancing loans).
Simply multiply the combined income of your family by 0.36 to get how much car you can buy using the 36% rule. Therefore, if you make $100,000, for example, and have no other debt, you might afford to take out a car loan up to $36,000.
What do owners of Lexus cars earn?
According to J.D. Power statistics, 42% of Lexus RX owners are women, compared to 38% of the segment as a whole, and their median age is 65, as opposed to 58 for the segment. They also have a median annual household income of $155,303, as opposed to $184,248 for the segment.
With a salary of 60k, what automobile can I afford?
It’s excellent that you did your homework before deciding to buy a car. Generally speaking, you should buy a car that costs no more than 35% of your gross annual income, meaning that if you earn $60k a year, you can afford a new automobile that costs no more than $21,000.
These are a few examples of vehicles in this price range:
- 2020 Honda Fit prices start at $17,145.
- Starting pricing for a 2021 Kia Soul is $18,765.
- Price of a 2022 Hyundai Accent: $16,440
- Price range for the 2021 Hyundai Venue is $19,935
- Starting pricing of the 2022 Kia Rio is $17,275.
- Price range for the 2020 Chevrolet Sonic is $17,595
You should also educate yourself on your insurance options as you discover more about your car options. Visit the Jerry app to obtain a list of auto insurance quotes that are suitable for you in a matter of minutes. The typical user saves $887 yearly.
What automobile can I buy with a salary of $75,000?
Choosing the appropriate auto loan Your monthly income will be $6,250 if you take your $75,000 annual income and split it by 12. In accordance with the formula outlined above, multiply that by 10% to arrive at $625. Based on this calculation, you shouldn’t pay more than $625 a month for your car loan.
What can you buy with a salary of $100,000?
The technical response to the question of how much rent you can afford is based on estimations made using one of several common sense guidelines. These technical estimations are used by landlords to pre-qualify you for the rent they think you can afford.
One general rule is to divide your pretax income by 40. Accordingly, if your yearly income is $100,000, you should be able to afford a $2,500 rent payment.
The 30% rule is yet another general principle. You will receive $30,000 if you subtract 30% from $100,000. That amount is equal to $2,500 every month when divided by 12 (the number of months in a year).
According to this method, if your net income is, let’s say, $75,000 (after deducting taxes and retirement plan contributions from your gross salary of $100,000), you would spend $37,500 on rent, utilities, and transportation. That comes out to $3,125 per month, but the rent allocation will likely be less due to the cost of utilities and transportation.
Can I buy a car with an income of $75,000?
According to the 10% rule, you shouldn’t spend more than 10% of your annual wage on car payments. You should try to spend no more than $7k a year on car payments if your yearly salary is $70k.
What kind of car can I get for my $50,000 salary?
Your auto payment should be estimated based on a variety of factors. How much money do you have coming in and how much of it do you spend on rent, a mortgage, and/or student loans? These are generally fixed costs that are more difficult to alter than, for example, your decision to cut back on dining out or cancel your cable TV subscription.
It ought to be lower for many of us, though. According to McBride, the 15 percent limit only applies “if you don’t have any other debt other than a mortgage.” Be wise about how much money you’re setting away because not many first-time purchasers can say that.
If I make $80,000 per year, how much should I spend on a car?
I believe that will amount to between 1015% of many people’s salary. So if your yearly income is $25,000, you’ll need to spend $2,500$3,000 on a secondhand automobile with a high mileage. A secondhand car would cost between $10,000 and $20,000 if your income is $80,000. (Yes, this is the hard truth of having sound financial judgment.)
But the truth is, I’m not really that frugal. As a personal finance blogger, I realize that sounds strange, but I’ve always been open about the fact that I’m more of a natural spender than a saver. I’ve had a number of self-checks and have improved my ability to make thrifty choices, but I no longer have the consuming need to save money wherever I can (though I frequently feel envious of others who do).
And I like vehicles. I like to drive and take good care of my cars, so I’m ready to spend a little bit more without going overboard.
Is insurance for a Lexus expensive?
- Lexus LX 570: Good drivers pay $2346, but those with bad credit must fork over $4131.
- Lexus NX 300: Good drivers pay $1870, but those with bad credit must fork over $3293.
- Lexus IS 350: Good drivers pay $2242, but those with bad credit must fork over $3948.
- Lexus RX 350: A good driver will pay $1814, while someone with bad credit will have to pay $3194.
- Lexus GX 460: Good drivers pay $1915, but those with bad credit must fork over $3371.
- Lexus ES 350: Good drivers pay $1938, but those with bad credit must fork over $3412.
- Lexus GS 350: Good drivers pay $2307, while those with bad credit must fork over $4062.
- Lexus ES 300h: Good drivers pay $2192, but those with bad credit must fork for $3859.
- Lexus RX 450h: Good drivers pay $1939, while those with bad credit must fork over $3413.
- Lexus RC F: Good drivers pay $3052, but those with bad credit must fork over $5374.
How much does it cost to maintain a Lexus?
With a considerably lower yearly repair cost of about $551 compared to the $652 average cost of car maintenance, Lexus luxury vehicles tend to be surprisingly more affordable to maintain than the average luxury car.
Unfortunately, the costs associated with buying a Lexus don’t end when you drive off the lot. To make sure your Lexus functions well, it is imperative to maintain it properly. Also take in mind that each year, the cost to fix one Lexus may be higher than another.
What is the lifespan of a Lexus?
In addition to offering a comfortable ride and cutting-edge technology, the luxury automaker Lexus is renowned for producing some of the most dependable vehicles on the road. Drivers can anticipate keeping their Lexus running for up to 20 years or 250300,000 miles.
According to J.D. Power, Lexus is the second-rated automobile brand in the U.S. for upkeep and dependability, and it has the strongest customer loyalty among luxury car companies. Similar to other luxury automobiles, Lexus does have slightly higher than average annual repair expenses, but its durability may end up saving you money over time.
Check out the information below to learn everything there is to know about Lexus:
Is $800 per month for a car a lot?
According to experts, your entire monthly car expenses, including payments, insurance, gas, and maintenance, should not exceed 20% of your monthly take-home pay. For those of us who aren’t math whizzes, like me Let’s say your salary is $4,000 per month. Then $800 a month would be a reliable estimate for car expenses.
Are vehicles a poor investment?
According to self-made millionaire and popular author David Bach, a brand-new car may look and smell nice, but it is never worth the price.
This is due to the fact that as soon as you drive it off the lot, it begins to lose value: By the end of the first year, the value of your car normally drops by 20 to 30 percent, and in five years, it may have lost 60 percent or more of its original worth.
Even worse, according to Bach, “most people borrow money to acquire that car.” “Why would you borrow money to purchase an asset whose worth drops by 30% right away?”
The good news is that you don’t have to break the bank to have a gleaming, pleasant-smelling automobile, advises Bach: “Buy a car that’s coming off of a two- to three-year lease, since that car is nearly brand new and you can buy it at that 30 percent discount.”
A automobile that is about to leave its lease is usually in excellent shape and has relatively few miles on it. But because it’s not brand new, you may get it for a lot less money than if it were.
If you’re still not persuaded, Bach advises considering the overall cost of a new vehicle: “Here’s how the auto companies hook you: They want you to pay attention to your monthly bills. They will adjust the monthly payments so that you can afford them.
“Stop considering monthly payments. Consider yearly payments. Keep the loan’s entire term in mind.
“If you’re spending $500 a month on that automobile, that works out to $6,000 a year, not adding car insurance or gas,” he explains. Your revenue for two or three months could be represented by that. Do you really need a car so fine, or could you purchase one that is less expensive, perhaps a little older, but still looks good and still runs? Do the math.