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.
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
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 is needed for a 50k 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 car can I afford with a 50k salary? ›
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.
How do I qualify for a 50k loan? ›
Lenders have varying criteria for borrowers seeking a $50,000 loan, but in general, the process is similar to smaller loans. Borrowers will need to provide proof of employment or income, a favorable debt-to-income ratio and a credit score and history that meets the lender's minimum qualifications.
Is it easy to get a 50k loan? ›
You'll typically need good to excellent credit to qualify for a $50,000 loan, though there are some options available if you have less-than-stellar credit. Kat Tretina is a freelance writer specializing in personal finance. Her work has been published in The Wall Street Journal's Buy Side, U.S. News, and Money.com.
What credit score is needed to buy a car? ›
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
What are the disadvantages of a large down payment on a car? ›
Disadvantages of a Larger Down Payment
The two biggest cons of making a down payment that's around 50 percent are: More money down doesn't lower your interest rate – Bad credit car buyers get higher than average interest rates, and it's extremely rare that a larger down payment can lower it.
What is a reasonable car 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.
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.
What is a good interest rate on a car? ›
A good interest rate for a car loan is typically below 5.18% for new cars and 6.79% for used vehicles. However, the best rate is unique to the borrower so it's best to look at the average interest rates for your credit score category to know if you're getting a good deal.
What credit score is needed to buy a car without a cosigner? ›
There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
What car can I afford on a $60000 salary? ›
How much should I spend on a car if I make $60,000? If your gross salary is $60,000, your take-home monthly pay is probably around $3,750, assuming about 25% of your pay goes toward taxes and other expenses. Based on the 10-15% calculation, you should spend no more than $562.50 on a monthly car payment.
What is the fastest car you can buy under 50k? ›
The fastest cars under $50k
| Fastest Cars Under $50,000 | | |
|---|
| Rank | Sports Car | MSRP |
| 1 | Ford Mustang GT With Performance Package | $47,570 |
| 2 | Chevrolet Camaro SS | $39,900 |
| 3 | BMW M2 | $48,900 |
12 more rowsMay 21, 2023
rule of thumb for how much your car payments should be. You should aim to keep your car payments around. 10% of your gross monthly income or below. So if you make 60 K a year, you should spend no more than $500 on your car payments.
Is it hard to get a personal loan for 50k? ›
Stringent eligibility criteria: A loan of this size has strict requirements, including a high credit score and verified income. These criteria can make it difficult for some individuals to qualify for the loan.
How long does it take to pay back an $50,000 loan? ›
Adam McCann, Financial Writer
It will take 47 months to pay off $50,000 with payments of $1,500 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
Is 50k in loans bad? ›
With $50,000 in student loan debt, your monthly payments could be quite expensive. Depending on how much debt you have and your interest rate, your payments will likely be about $500 per month or more. Your potential savings from refinancing will vary based on your loan terms.
How much is a $40 000 loan for 5 years? ›
If you take a loan for five years and your interest rate is 4%, your monthly payment for a $40,000 loan will be $737. Remember that the longer the loan period, the more money you will overpay to the bank.
