How Much Car Can You Really Afford? (By Salary)

How Much Car Can You Afford?

In this video we go over the car buying rules that can help you understand how much car you can afford.

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Timestamps:
0:00 - Intro
0:30 - Current State of Industry
1:15 - Rule 1: The 35% Rule
2:07 - More Conservative "25%" Rule
3:02 - The 20/4/10 Rule
4:34 - The "4" Years
6:13 - The 10% Rule
7:52 - Buy or Lease?
9:35 - Opportunity Cost
10:15 - Car Saving Tip 1
10:47 - Car Saving Tip 2
11:00 - Car Saving Tip 3
11:36 - Lifestyle Creep

PS: I am not a Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for & they help support the channel

[liamm-c]

I love talking to suburban moms about their car choices. They say all they want is something that gets them from A to B. And then they get a 7 seat land yacht for the cost of a house.

[RbFerrer]

Having no car payment is one of the best feeling ever. I make over 100k a year, but still drive a 2014 Honda Civic. As long it gets me from point A to point B then I'm good.

[joseluismartinez]

The range in 20% to 35% in vehicle expense was very useful. Sometimes, a household lives on a single salary, and two vehicles are needed, having a min and max benchmark really helped

[fredAugustus]

“I GOT RICH DOING THIS” steps below...

[DomoKang]

So basically if you work your way up to a $50, 000 salary (which can take 5-10 years) you finally have enough to finance a 2015 Prius with 100k miles. What a time to be alive.

[bigali]

As a 19yo college student finding a car that’s 10% of my salary is basically impossible. Inflation and car markets are so fun!

[dcjohnson]

Paid my car off this month! So happy, hoping to keep for as long as I can with little to no trouble!

[zankiohex]

This makes sense if you only use a car as a means of getting from A to B and don't consider cars your hobby or something you're enthusiastic about. Because if you do then a large part of your "fun" money will also go towards your car(s), whereas other people would put the same money into going out clubbing, having frequent vacations, playing golf, drinking at the bar every other night, etc.

[brunoalves]

Problem is that used car now a days are going for almost as much as the new ones, it looks like a terrible deal even if it is 2-3K cheaper.

[mayssm]

Wages just haven't kept up with car prices. $1000 car payment is insane. That's close to a mortgage or rent for something that's going to depreciate 50% over the next 5-10 years. Even the used car market is ridiculous.

[rover-t]

Thanks for a great video. Totally agree on buying a used car. Buying a 3-5 year old vehicle is the best value for your dollar. Im not a fan of financing, but I if I did, I would put down a larger deposit to really minimise the depreciation / resale loss at the time of changing. Some companies like Hyundai give longer warranties so owners can be protected on older cars for longer.

[dealforbet]

I love how Humphrey gives practical advice on car expenses that can really make a difference in your financial future.

[rustybros]

Never thought I would see the day when having an 80k salary can only get you a Corolla. 🤣

[Lakersfansince]

I bought my 2014 base trim malibu during the peak of car prices in 2021 because i needed a car and inventory was low for a subprime buyer like me. I learned a valuable lesson in financing this car so far and its that once im done paying it off i NEVER want a car payment ever again unless its absolutely necessary(family needs or work needs etc) 😅

[Angelcee]

Getting a brand new car was the biggest financial mistake I had made in several years. Getting rid of it and getting into something cheaper was the best decision at the end of the day. One lesson that I learned is that cars all essentially serve the same purpose (for most people), getting you from point A to point B. IMO the biggest reason that people get expensive cars is for the vanity of it.

[PlywoodFraternity]

I do think it’s very funny that for the past 70 years we’ve prioritized infrastructure that makes not owning a car extremely inconvenient and then halfway through that infrastructure boom we ended up with an economic ecosystem where a significant and growing portion of the population can’t even afford to purchase a car without going into debt on a depreciating liability

[UtotheJ]

I bought my 2007 Honda Accord 2-door coupe in 2013 with cash (my biggest purchase during my my first job out of college). The previous owner took great care of it and I absolutely (and still) love the car! It’s helped us through some really difficult times, but also shared with us the most amazing memories! Our two toddlers don’t ride it much anymore because the lack of backseat space. I make 300k+ now, and yes the thought of buying a 100k+ “luxury” vehicle crossed my mind multiple times, but my wife and I would drive our beautifully kept red Accord for as long as it allows us!

[lavs]

One thing that often gets overlooked is registration costs and insurance costs. Our current 2 cars (14 and 15 years old) cost only $60/month for registration and insurance. 2 cars that are just a few years old could easily costs 6X that.

[ShakaHoola]

Your point on opportunity cost was some of the best advice I heard when I was buying a car last March. I went with that approach and it ended up saving me thousands. I watched many other advice videos at that time and nobody else mentioned that tactic.

[yodawg]

When a vehicle payment is as much as a house payment we've hit a new level of idiocy.