How Much Should You Spend on a Vehicle?
Owning your own vehicle is synonymous with having complete freedom. A vehicle lets you go wherever you want, whenever you want. If you can afford it, that is.
Even the cheapest vehicles are expensive. A less reliable vehicle can cost you thousands in maintenance and repairs. An premium model with all the features you could ever want, can cost more than people make in year. Chances are, you NEED a vehicle. You HAVE to have a vehicle. The question is, how much vehicle can you afford?
The answer depends. Depends on your income, your lifestyle, and how important having a “cool” vehicle is to you.
How much should you spend on a vehicle?
In general, the answer is “As little as possible”. Saving money boils down to making good decisions on the three biggest expenses in your adult life: the house you buy, the car you buy, and how much you pay for college. Big bills make it harder to build savings accounts and grow your wealth.
So you have three answers.
The frugal shopper will spend 10% of their yearly income, the compromise is 20% and those who really love vehicles utilize up to 50% of the yearly income.
Lets break this down using the a table.
Now that you’ve had a look, you can consider your down payment and monthly payment from there. Getting a complete idea of the vehicle purchasing process is always a good idea.