What’s a good budget to set for a first car? Thinking about getting a 30k car on a 100k salary pre tax and don’t have any other debt. All the affordability calculators I’ve seen online calculate based on monthly payments but I’m wondering if there is a % of income based view. Seems doable but I’m not sure if it’s a good financial decision considering the costs of having a car other than the monthly payment!

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1. Never buy a car which costs more than your annual salary.
2. Usually get a used car as your first car - helps build driving history and keeps insurance premium low - also helps to understand the cost of maintenance as well as how depreciation works.( I'm not saying a 2010 car, even 2017 cars should be cheap today and last for a while)
3. In terms of direct amount, the right amount is what you are comfortable paying in full today ( if 30k to pay at once feels too much for a car, don't loan it either)

likehelpful

The finance gurus would tell you to buy a car you can pay cash for as you don’t want to get a loan on a depreciating asset. How much do you have saved?

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Put as little down as possible! Put the rest in the market. You can easily beat 3% over 4-5 years.

I’d you really are set on buying new, your guidelines for the maximum range should be 48 month financing with 20%, and your resulting payments should be less than 10% of your monthly income.

E.g financing a 25k car, 20% down = 5k cash down payment, then the 20k loan for 48 months depending on interest leaves you a ~400-500/month payment. Add monthly insurance then compare that to your monthly income and keep it under 10%

helpful

Agreed. If you plan to keep your car beyond the loan (which if you’re buying the car vs leasing, I presume you plan to keep), it also doesn’t matter. Ironically, my car has actually increased in value by $4k since purchasing last year (and 5k additional miles)—wouldn’t anticipate this happening on all purchases, but point being, 20% down should not be a black line.

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Depends how much you value a car. You set the price you’re willing to pay

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