How much should your first car cost?

How much should I spend on my first car? After living in the city for so long and never needing a car, I am moving to the suburbs and want my own transportation. Since I’m 27 and have never made a big purchase, I need help figuring out the financials.

Hana Sabah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Experts recommend that you spend $5,000 to $10,000 on your
first car
, but it depends on what you can afford.
Here are a few simple tips to help you calculate a figure that would work well for you:
  • Overall budget: Don’t spend more than 15% of your gross pay or 20% of your take-home pay.
  • Down payment
    : Ensure you can make a down payment of at least 20% of the car’s value if you’re financing it.
  • Loan term
    : Your maximum loan term should be 48 months—even if the prices for
    longer terms
    are tempting.
Keep in mind: The price of the vehicle is just the first item on the long list of expenses that accompany car ownership. There’s also
, insurance,
, repairs, fuel, and so on.
The $5K to $10K price range should be enough to purchase a safe older vehicle, which will likely cost less to insure. However, the vehicle may also need more repairs, so set aside funds in advance so you won’t find yourself in a bind when something goes wrong.
Pro tip: When
buying your first car
, remember to get pre-approved ahead of time, shop for insurance, and closely read the fine print of any paperwork.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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