what's your monthly car payment as a % of your monthly takehome? (rent, insurance)

[stp_fan]

Is 11% too high? I don't want to have a big car payment, but I am trying to see if I cam over extending myself or not. Thanks

[CaliTerp07]

That seems pretty high to me, but it really depends on your other expenses. If your rent/mortgage is low, you have more money to spend on a vehicle. More importantly, if 11% of your paycheck goes towards a car, are you still able to save a significant portion towards retirement/emergency funds/etc?

I'm probably not the best one to answer as we've always bought used cars and paid cash. I don't like the idea of a car payment.

[vauser]

I think it is definitely too high.. The highest I've paid is right out of college, for a brand new car at a horrendous interest rate and that was about 9% of my take home.

[RamblingMan]

Whether 11% would constitute overextending yourself probably depends on how much you earn, what other debts you have, and what assets you have. If you have a very high income, a paid off house, and a lot of money invested, for example, 11% is probably not overextending yourself. If you have an expensive rent or mortgage (likely in this area) or a lot of credit card or student loan debt, 11% might be far too much.

But even if you're not overextending yourself, it doesn't mean that it is a good idea. Rather than thinking about what percentage of your monthly take home you can spend, I think it is more useful to think about the percentage of your total net worth. Personally, I think it is a bad idea to have a significant portion of your total net worth tied up in depreciating assets. Even if 11% of your take home is supportable, the opportunity cost over time is tremendous. If you consistently invest an additional 11% of your income rather than sink it into car payments, at some point you'll be able to pay cash for really nice cars.

I understand that a lot of people have to take out car loans, especially when they're relatively young and don't have much cash saved up, but I think there's a lot to be said for minimizing debt and maximizing investments. I think if you're not putting away at least 15% toward retirement, 11% for a car is too high. I love cars, boats, motorcycles, and other toys, but these days I pay cash or I don't buy them at all.

[ChristineVA]

Mine is something like 4.5% of my take home. I have four people, four cars, one car payment. My insurance payment is another matter!!!! Anyway, I'm getting ready to add a new car to my household which will take me up to about 8%.

[HereinVA]

Less than 5%...it's too early in the am for me to get out a calculator and figure exactly.

[sullyguy]

On average probably significantly less than 5% here. I buy a new car and keep it - that lowers the average cost to noise level (currently have a 2001 and a 2006).

[SallyField]

Originally Posted by ChristineVA

Mine is something like 4.5% of my take home. I have four people, four cars, one car payment. My insurance payment is another matter!!!! Anyway, I'm getting ready to add a new car to my household which will take me up to about 8%.

Five cars! Ouch, I cannot imagine the insurance.

stp_fan - Whether you are over-extending is difficult for anyone here to judge. Some people would be fine paying 11% of income to a car payment, some would not. As long as you can continue to save and have a rainy day (or "I just got laid off") fund that can cover the car payments too, I don't see a problem with it.

[ChristineVA]

Originally Posted by SallyField

Five cars! Ouch, I cannot imagine the insurance.

Yes, and one of them is a 17 y/o male. Double ouch. But, I will be getting rid of ONE of the cars when I buy this new one.

[Novadhd5150]

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