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.
What is the monthly payment on a 50k loan? ›
Monthly payments for a $50,000 personal loan
| Loan duration | Average monthly payments ($50,000 loan) | |
|---|
| Poor credit | Average credit |
|---|
| 1–12 months | $4,218.00 | $5,618.33 |
| 13–24 months | $2,310.59 | $2,339.38 |
| 25–36 months | $1,880.71 | $1,666.19 |
1 more rowMar 7, 2024
Calculating the monthly cost for a $50,000 loan at an interest rate of 8.75%, which is the average rate for a 10-year fixed home equity loan as of September 25, 2023, the monthly payment would be $626.63.
Is it hard to get approved for a 50000 loan? ›
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.
Can I get a $50,000 car with a 600 credit score? ›
It's essential to be knowledgeable about how your auto loan process will be different than someone with a higher score. You might not have the same options, but you can still get an auto loan with a 600 credit score.
What credit score do you need to get 0% interest on a car? ›
Credit score: You might need a credit score of at least 740 to be considered for a 0% APR loan. The minimum credit score depends on the dealership and the car you're interested in purchasing.
According to our research, you shouldn't spend more than 10% to 15% of your net monthly income on car payments. Your total vehicle costs, including loan payments and insurance, should total no more than 20%.
What is a decent car payment? ›
In general, it's recommended to spend no more than 10% to 15% of your monthly take-home income on your car payment, and no more than 20% on your total vehicle expenses, including insurance and registration. Read on to learn how you can determine how much car you can afford based on your financial situation.
What is a good car monthly payment? ›
Financial experts recommend spending no more than 10% of your monthly take-home pay on your car payment and no more than 15% to 20% on total car costs such as gas, insurance and maintenance as well as the payment.
How much is $40 000 car payment for 72 months? ›
If you take a car loan of $40000 at an interest rate of 4.12% for a loan term of 72 months, then using an auto loan calculator, you can find that your monthly payment should be $628.
How much is a $40,000 car loan payment 84 months? ›
For example, a car buyer considering a $40,000 new car loan with an 84-month term at 9% APR would have a monthly car payment of about $623 and pay $12,369 in interest over the seven-year loan.
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.
Is 5k enough for a down payment on a car? ›
How much should you put down on a $25,000 car? For a $25,000 car, consider putting down at least $2,500 if it's used or at least $5,000 if it's new. By putting 10% or 20% down depending on the car's condition, you'll have the best options for loan terms and interest rates.
Is $4000 a good down payment for a car? ›
How much should a car down payment be? Financial experts recommend a down payment of at least 20 percent when financing a new or used vehicle. This amount is steep for many, especially with the recent spike in new and used car prices. For example, a 20 percent down payment on a $40,000 vehicle is $8,000.
Is $40 000 a good down payment? ›
How Much Should I Pay for a Down Payment? Aim for a down payment that's 20% or more of the total home price—that's $40,000 for a $200,000 house. This minimum is partially based on guidelines set by government-sponsored companies like Fannie Mae and Freddie Mac.
