The average price of a new car is just over $48,000 and could soon hit $50,000, according to industry experts. That's a lot of money to save up for a vehicle, so chances are good you'll probably have to borrow to buy it.
If you don't have the cash in a high-yield savings account and need a loan to get a new car, how much would the monthly payments be? Here's what you need to know.
This is how much a $50,000 car could cost you
When you buy a car, you'll typically need a down payment. Generally, you should aim to put around 10% down to help you qualify for the best rate on an auto loan. This will also ensure you don't find yourself owing a lot more than the car is worth, since vehicles depreciate (or go down in value) pretty fast.
So, if you wanted to buy a $50,000 car, you should save up around $5,000 for the down payment. That would leave you with a car loan balance of $45,000. And the monthly payment on that amount would vary depending on two factors: the interest rate you were offered and the term of your car loan.
The table below shows how much your monthly payment and total interest costs would be at different loan rates with different term lengths (including if you borrowed at 6.07%, which was the average loan rate to buy a new car as of the end of 2022):
As you can see, a longer payoff term comes with lower monthly payments that could be more affordable. But you significantly increase your interest costs over time if you take many years to repay a loan.
And even with a pretty reasonable interest rate and a long payoff time, the monthly payments on a $50,000 car are still very expensive.
Can you afford a $50,000 car?
In general, you should try to keep your monthly car payments to 10% of your take-home income or less. If you wanted to stick to this rule of thumb and buy a $50,000 car, you would need a monthly take-home income of at least $7,240 if you got a car loan at a below-average rate and stretched out your payoff time for a long time.
Many people will find that purchasing such an expensive car really isn't affordable. If that's the case, that's OK. You have a few options, including:
- Buying a less expensive used car. This is often your best bet, since cars depreciate quickly and you take a huge financial hit if you buy brand new.
- Saving up to buy a more expensive car so you don't have to borrow as much. If you want a nice new car, there's nothing wrong with prioritizing this in your budget and saving up enough money to make a larger down payment so you can purchase the car and keep your monthly payments reasonable.
One technique that worked great for me was buying a cheap used car, paying it off quickly, and then continuing to make "monthly car payments" into a savings account (basically diverting the money I was using to make car payments into savings).
After driving the reliable used car for a long time, I ended up with enough money to buy a really nice used car for cash, which I drove for well over a decade while continuing to make "car payments." That, in turn, gave me a big enough balance to finally buy the brand-new car with cash that I'm driving now.
Committing to a huge car loan you might not be able to afford is not a smart financial move, so you may want to try my approach -- especially with the price of new cars climbing to a point where borrowing for them may be beyond reach.
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FAQs
The loan payments on a $50,000 car could be $724 or higher -- depending on down payment, interest rate, and loan term length. This would make buying a new car unaffordable for many.
What's a good down payment on a 50k car? ›
In general, you should strive to make a down payment of at least 20% of a new car's purchase price. For used cars, try for at least 10% down. If you can't afford the recommended amount, put down as much as you can without draining your savings or emergency funds.
What credit score do you need for a $50,000 car loan? ›
To buy a $50,000 car and get favorable auto loan options, it's best to have a credit score in the prime or super prime categories. Prime borrowers are those with a credit score within the 661-780 range, while super-prime borrowers fall within the 781-850 range.
What is the average monthly payment on a $60000 car? ›
The total amount of money you borrow determines what you'll pay per month. For example, if you're buying a $60,000 luxury car at 3% APR with no money down and paying it off over five years, you'll be responsible for paying about $1,078 per month.
How much is the monthly payment for a $40,000 car? ›
If you are offered a 2% interest rate for three years (or 36 months), 3% for four years (48 months), 4% for five years (60 months), and 5% for six years (72 months), your monthly payments for a $40,000 loan will be as follows: Three years – $1,146. Four years – $885. Five years – $737.
How much is a 50k car per month? ›
The loan payments on a $50,000 car could be $724 or higher -- depending on down payment, interest rate, and loan term length. This would make buying a new car unaffordable for many.
How much would a monthly payment be on a $50,000 loan? ›
Here's what a $50,000 loan would cost you each month
| 8.00% |
|---|
| Two-Year Repayment | $2,261.36/month, $4,272.75 in interest over time |
| Seven-Year Repayment | $779.31/month, $15,462.10 in interest over time |
| 10-Year Repayment | $606.64/month, $22,796.56 in interest over time |
Jan 20, 2024
You'll have the best chance of getting approved with an excellent credit score, such as one above 800. You may struggle to find a lender that will approve a $50,000 loan for folks with poor or bad credit. A "poor" credit score is considered 580 or under. Most lenders require at least a "fair" score of around 670.
How much to afford a 50k car? ›
How much car can I afford based on salary?
| Annual salary (pre-tax) | Estimated monthly car payment should not exceed |
|---|
| $25,000 | $208 per month |
| $50,000 | $416 per month |
| $75,000 | $625 per month |
| $100,000 | $833 per month |
2 more rowsOct 13, 2023
For a $50,000 personal loan, lenders will likely want to see a strong credit score and history. Requirements vary from lender to lender, but a relatively high credit score may be a prerequisite to qualify for a sizable loan.
According to experts, a car payment is too high if the car payment is more than 30% of your total income. Remember, the car payment isn't your only car expense! Make sure to consider fuel and maintenance expenses. Make sure your car payment does not exceed 15%-20% of your total income.
What is a good car monthly payment? ›
Financial experts recommend spending no more than about 10% to 15% of your monthly take-home pay on an auto loan payment. These percentages do not factor in total car expenses, including gas, insurance, repairs and maintenance costs.
What are the disadvantages of a large down payment on a car? ›
Providing more money down doesn't guarantee a lower interest rate, and it can cut into your savings. Depending on the vehicle you choose to buy, 50% can be a lot of money to put down on an auto loan.
What's a good down payment on a 40k car? ›
It's good practice to make a down payment of at least 20% on a new car (10% for used). A larger down payment can also help you nab a better interest rate.
How much is a $30000 dollar car monthly payment? ›
A $30,000 auto loan balance with an average interest rate of 5.0% paid over a 6 year term will have a monthly payment of $483.
How much is a car payment on $25,000? ›
Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.
What car can I afford if I make 50k? ›
If you make a $50,000 gross salary, after taxes (depending on where you live) your monthly take-home pay is roughly $3,230. Based on the 10% rule, you could afford, at most, a $323 monthly car payment. If you take out a 60 month (5 year) auto loan at 8% interest, you can afford a $17,000 car.
What credit score is needed for a 50k loan? ›
You'll have the best chance of getting approved with an excellent credit score, such as one above 800. You may struggle to find a lender that will approve a $50,000 loan for folks with poor or bad credit. A "poor" credit score is considered 580 or under. Most lenders require at least a "fair" score of around 670.
What is a good down payment for a 45k car? ›
A down payment between 10 to 20 percent of the vehicle price is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan. By dropping the amount financed, you save some even before you start negotiating the car price.
Is 50% too much of a down payment for a car? ›
If you want to, you can definitely make a 50% down payment on a car if you have the cash. It's uncommon, but as long as you finance at least the minimum amount – usually $5,000 if you have bad credit – lenders don't have a problem with you making a really big down payment.
