NPR recently published an article stating the average car payment has surpassed $700 per month. This does not even include insurance and maintenance. Thus, the total cost of ownership for the car is even higher.
So, my question is do you think $700 is too high for a car payment?
(credit: rawpexil.com)
Also, did you know that a new car will be less than 50% of its purchase price in 5 years? For example, if you purchased a car for $50,000 today, in year 2027 the value of the car will be less than $25,000. That is a large amount of money to lose in car depreciation in 5 years.
I want you to consider, will you save $25,000 in the next 5 years? Consider if it is better for you to buy a used car and save the extra money or buy a new car.
These are the type of decisions you have to make as you manage your personal finances. Let me know if you think that a $700 car payment is too high. Leave your thoughts in the comments.
Thanks,
Mike
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$700 car note is definitely too high! However long as the note is less than 20% of your take home pay including including loan payment, gas, insurance and maintenance it could for your situation.
However, If you would really like your money to work set this rule of thumb at 15% and invest the rest !