I've always wondered what an average income/auto price would be? I bought my S2000 new (financed) and didn't think it was too expensive of a car, but definitely not dirt cheap either. I see more expensive cars all around me out in public, and just wonder how much of some people's incomes goes towards their autos? I'm a Dr. and have an above average income for sure, so I'm wondering what all these other people are doing driving vehicles worth twice as much as mine--maybe I'm low-balling my auto expense? I guess it could also be the situation of how much a nice car is important to each person, and the fact that I'm only 30 and don't feel like I'm at a stage yet where I deserve a Porsche

 

most people compare monthly payments to income

 

 

General rules are up to 20% of your take home if you're single, 15% if you own a house, but really, you need to look at your financial situation. Car, house, school debt, insurance, business costs if any, etc.

That doesn't mean people pay attention to the rules though - lots of people spend more than 50% of their income on their car alone.

 

(monthly car payment + monthly car insurance) / monthly net pay = 15%

 

Most people are in debt up to their eyballs...

 

A good salesperson (relatively speaking) won't let you go over 1/3 of your income. Unfortunately you can get 72-month loans to make the equation work.

There are no car payments in my home. I'll be paying cash for my next car.

 

between the car payment and insurance i spend about 15% of my net month income. ive asked this question to some buddies in the past and ive never gotten a "right" answer, but 10-20% seems to be the norm

 

QFT.

When I bought my S2000, the monthly payment + insurance was approximately 11% of my gross salary. I had no problem making the payment, and thought it was a reasonable purchase.

Six years later, my salary has increased by 50%, but I couldn't see myself fitting that same car payment into my current budget. The difference is that I now have a mortgage, plus I'm insistent on saving/investing 30% or more of my gross salary, whereas six year ago I was in a cheap apartment and only saving/investing about 6-8% of my salary.

Everybody's situation is different. I'd say that if you're paying your bills and saving/investing an amount that you're comfortable with, then you can spend the rest however you like... whether it's a car payment, or on computer gear, or sports equipment, or traveling or whatever.

But if you make $30K/year, have no savings but you're driving a new M3... I'm going to consider you to be financially irresponsible.

 

My s2000 was financed and was 100% of my income, 50% of household. My newest car quite different.