How much car debt is too much?

Car debt is generally considered too high if monthly payments exceed 10%–15% of your pre-tax income, or if total monthly transportation costs (insurance, gas, maintenance) surpass 20% of your take-home pay. Experts recommend keeping loan terms under five years to avoid owing more than the car is worth.

Is $500 a month too much for a car payment?

$500 a month for a car payment can be a lot or reasonable, depending on your income, the total loan amount (often meaning a car worth $25k-$30k with good rates/terms), and other car costs like insurance, gas, and maintenance; financial experts suggest your total car expenses shouldn't exceed 15-20% of your net income, so $500 might be high if you have a lower salary but manageable for higher earners. 

Is 24.99 APR high for a car?

A 24.99% APR is not good for auto loans. APRs on auto loans tend to range from around 4% to 10%, depending on whether you buy new or used.

How much would a $70,000 car payment be?

A $70,000 car payment varies significantly but expect roughly $900 to $1,300+ monthly for a loan, depending on term (60-72 months common) and interest rate (e.g., 6-9% APR), or $700-$1,200+ for a lease, factoring in down payments, miles, and money factor, with total auto costs (payment, gas, insurance) potentially reaching $1,000-$1,500+ monthly for a comfortable budget. 

Is a $600 car payment too much?

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.

How Much Car Is Too Much?

What's the average payment on a $30,000 car?

For a $30,000 car, your monthly payment could range from around $500 to over $700, depending heavily on your down payment, loan term (e.g., 60 vs. 48 months), and interest rate (APR), with longer terms and higher rates increasing payments, while a larger down payment (like 20%) lowers them significantly. For example, with a $3k down payment, 5.8% rate, and 60 months, it's about $520; with a good rate on a 4-year loan, it could be $733. 

What is Dave Ramsey's rule on cars?

Dave Ramsey's core car rules emphasize paying cash, buying reliable used cars, avoiding new cars unless wealthy, and keeping total vehicle value under half your annual income to stay out of debt and build wealth. His philosophy centers on avoiding car payments, which he sees as money lost on depreciating assets, encouraging saving for a solid, affordable used vehicle instead. 

What is America's average car payment?

The average U.S. car payment is around $748 for new cars and $532 for used cars, based on late 2025 data, with payments often exceeding $1,000 for new vehicles due to high costs and longer loan terms. Factors like credit score, loan length (averaging around 69 months for new cars), and interest rates significantly affect your payment, though overall loan amounts and monthly costs continue to rise.
 

What credit score do you need for a $10,000 car loan?

Most borrowers need a FICO score of at least 661 to get a competitive rate on an auto loan. If you have a low credit score, you may still qualify, but you should consider building your score before you start searching for loans.

Is a 60 or 72-month car loan better?

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.)

What is the 8% rule when buying a car?

The 20/3/8 rule is a guideline that suggests you put 20% down on a car and repay the loan over three years. Applying the rule correctly will also require your monthly payment and car expenses be 8% or less of your income.

How much is 26.99 APR on $3000?

At 26.99% APR on a $3,000 balance, you'd pay roughly $67 in interest per month, totaling about $800 annually, if you carry the full balance without paying it down; this is calculated by dividing the APR by 12 for the monthly rate (approx. 2.25%) and multiplying by the balance, notes National Debt Relief.

What does Dave Ramsey say about car payments?

Dave Ramsey strongly advises avoiding car payments altogether, calling them a "financial disaster" because cars lose value (depreciate), preventing wealth building; instead, he promotes paying cash for a reliable, quality used car and investing the money you would have paid monthly, which could grow to millions over time, contrasting this with average payments ($700-$750+) that keep people broke.
 

What car can I afford making $3,000 a month?

Take-home pay is the amount you make each month after taxes, so if you bring home $3,000 monthly after taxes are deducted, it's likely you can comfortably afford a $300 car payment.

How much is a $20,000 car loan for 5 years?

A $20,000 car loan over 5 years (60 months) results in monthly payments that vary significantly with the interest rate; for example, around $387/month at 6%, paying about $2,300 in total interest, while a lower rate like 3% makes payments about $359/month, with less interest, showing how crucial rate and loan terms are to your total cost.
 

How much is a $30,000 car loan for 60 months?

A $30,000 car loan for 60 months typically results in monthly payments ranging from about $500 to $600+, heavily depending on your interest rate (APR) and any down payment; for example, at 5% interest, it's around $566/month, while 7% could be closer to $600+, but lower rates or a larger down payment decrease this cost, say Edmunds, Calculator.net, and Honor Credit Union. 

What disqualifies you from an auto loan?

Large amount of debt

A DTI of 50 percent or higher may lead to rejection because lenders determine how much you can afford based on your income, current debts and requested loan amount. Paying down your debts is the best way to lower your DTI, but if you're able, a second source of income can also lower your DTI.

Does pre-approval hurt my credit score?

Credit card pre-approval typically doesn't affect your credit scores because it usually involves a soft credit inquiry. Also known as a soft pull or soft credit check, a soft inquiry doesn't impact your credit scores. It's simply a way for issuers to determine whether you may qualify for their credit card offer.

How much should I spend on a car if I make $100,000 a year?

With a $100,000 salary, you can generally afford a car worth $30,000 to $50,000, depending on your other finances, with total monthly car expenses (payment, insurance, gas, maintenance) ideally under $800-$1000 (10-20% of your net pay). A good guideline is keeping the total vehicle value under half your annual gross income, but prioritize conservative spending, a 20% down payment, and shorter loan terms for better financial health. 

Is a longer or shorter loan better?

It's a trade-off: a shorter loan term saves you significant interest and gets you debt-free faster but demands higher monthly payments, while a longer loan term offers lower monthly payments for budget flexibility but costs much more over time due to increased interest. The "better" option depends on your financial situation: choose short for savings if you can afford it, or long for breathing room if cash flow is tight, ideally with the option to pay extra. 

How many people are behind on their car payments?

Millions of Americans are behind on car payments, with over 7 million delinquent by 90+ days around early 2019, and recent data from late 2025 shows around 5% of all auto loans seriously delinquent, hitting record highs for subprime borrowers, driven by higher car prices, interest rates, and inflation, especially impacting younger generations and lower-income groups. 

How much should I spend on a car if I make $60,000?

On a $60,000 salary, you can generally afford a car in the $20,000 to $30,000 range, with total monthly car expenses (payment, insurance, gas, maintenance) ideally staying under 15-20% of your take-home pay, which might be around $300-$450 for just the payment, though some say up to 35% of gross income for the total vehicle price. Key factors are your credit score, down payment (aim for 20% to avoid PMI and reduce interest), loan term (shorter is better), and other debts. 

Why Dave Ramsey says not to finance a car?

“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.”

What is the most financially smart way to buy a car?

How to make a financially savvy car purchase

• Choose wisely. Choose the make and model based on what you need. ...
• Set a budget. ...
• Make a big down payment. ...
• Look for sales. ...
• Shop around for the best loan. ...
• Cut down on interest. ...
• Make a deal. ...
• Keep saving.