How much money should I spend on monthly car payments?
This really depends on how much money you make and how much discretionary income you’re willing to put toward a vehicle. The general rule of thumb is to spend 10 to 15 percent of your income after taxes, but if you cut down on the money you spend elsewhere you might be able to swing a little bit more. You should also consider other automobile-related expenses such as gas, auto insurance, registration fees and maintenance. According to AAA’s 2017 Your Driving Costs study, the average driver pays more than $6,000 per year to own and operate a small sedan and over $7,000 for a sport-utility vehicle. These figures factor in fuel costs, repairs and depreciation, which are all things you should consider when deciding how much money to spend on your next vehicle purchase.
– Edward Lyons, director of financial services for AAA Northeast
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