Percentage of yearly salary should be put towards a car?

Answer 1

As cars almost always depreciate in value, especially in the first year, they are a horrible investment. So, rather than trying to determine a percentage of yearly salary to pay towards a car, you should try to do a couple of other things: 1) Do you need a car? Public transportation is affordable and helps combat global warming. 2) Find the least expensive car you can that will meet your needs. Consider buying used; if you buy a car that is two or three years old, it will still be under warranty but the original owner will have eaten most of the depreciation. You'll get a good car at a much better price than if you bought the car new. Don't get caught up in image--you should save money for retirement rather than spending excess money on a car (otherwise, you'll have to retire IN your expensive car). 3) If you can, save the full amount of the car before buying it. That makes the total cost cheaper. 4) If none of these options works for you, then you need to figure out how much you owe in an average year on your credit card bills, phone bills, utilities, etc. Then figure out what your car payment will be. If you add all of these together, the total amount of debt should be no more than 15% of your income.