Are there any rules of thumb for how much to spend on a vehicle purchase?

[kyrani]

@babyishcare I have heard 1/6 of income for total monthly cost: car payment, insurance, gasoline, maintenance. You can increase this if you live in a rural area or if the vehicle is a part of your livelihood.

The other rule I heard is no more than six months income for total vehicle price.

 

[lwood6145]

@babyishcare Dave Ramsey has it right here:

DON'T (until you're a millionaire) buy a NEW car. Buy 2-4 years old at best.

DON'T borrow money to buy a car. Buy the best car for cash that you can.

Lastly, the total value of your vehicles (anything with a motor in it) should never be more than half of your annual household income.

https://www.ramseysolutions.com/insurance/new-car-vs-used-car

 

[cormickco]

@lwood6145 Agreed. Dave is douche but when he’s right , he’s right.

 

[lwood6145]

@cormickco I hated some of my math teachers in school but I still like math.... same thing with Dave.

 

[mrubacha]

@babyishcare 30% of your take home pay seems like a lot. Maybe more like 10%.

 

[cubinity]

@mrubacha OP mentioned 30% for rent as an example of the type of rule they’re asking about. Not as an appropriate percent for a car payment

 

[mrubacha]

@cubinity Thanks. I was reading it as car payment as 30%

 

[resjudicata]

@babyishcare I use one month's gross salary for total purchase price.