What's the rule on how much you should spend on a car?

"If I make $5,000 a month, how much should I spend on a car? I've heard that there's a rule on how much you should spend on a car based on income."

Answer
“The rule is to spend no more than 10% of your gross pay on a car, so that would mean you shouldn’t buy a car that costs you more than $500 a month.
The reason behind this is to keep you from overextending yourself, ending up upside down on your car’s value, or putting yourself in financial dire straits.
Plus, $500 will get you a pretty nice car without breaking your budget. A sizeable down payment will help reduce the monthly costs of your vehicle as well.”
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Eric Schad
Answered on Jul 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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