Money Matters

Experts Say You Should Spend This Much On Your Car Each Month

Auto Payments Can Wreck Your Budget. Here’s How to Keep Them In Check.

BY Liz KnuevenSeptember 23, 2019

Money loves rules.

There’s the 30% rule about how much of your gross income you should spend on housing. The 20% rule about how much of your paycheck should go to savings. And even the wonky, not-at-all-rounded 43% rule regarding the ideal household debt-to-income ratio.

Given all these guidelines, it probably won’t surprise you to learn there’s a rule about what you should spend on a car, too. We talked to experts about it—and their answers were remarkably consistent.

The 15 Percent Rule

The experts have spoken, and they agree: Don’t spend more than 15% of your income on car payments.

“I would say that you should aim to spend about 10% to 15% on your auto loan,” says Tony Arevalo, co-founder of “There’s always some wiggle room, but the max seems like a hard rule.”

Valerie Colman, formerly of Autotrader and now head of auto sales at person-to-person marketplace app 5miles, goes a step further by suggesting you factor insurance and all your other mobility-related costs into that 15 percent.

Other experts say this number should be even lower—especially if your family is rolling with two car payments.

“I recommend aiming for less than 10% of your monthly income spent on car payments,” says Chane Steiner, CEO of personal finance site Crediful. “This percentage allows you to keep your total loan payments to less than one third of your income.”

A New Solution For Your Car Spend

Of course, it’s one thing to know that you need to keep your car spend under control—and another to actually stick to those limits.

One new way to ensure you end up with manageable car payments is with Fair, an app that lets you shop for pre-owned cars by monthly payments you can afford, sign for the one you want with your finger, and turn it in any time.

To make it easy to keep track of your car-related costs, Fair even bundles roadside assistance, routine maintenance and a limited warranty right into your monthly payment.

The result is an entirely new way to get a car—with no negotiation, long-term commitment or even physical paperwork. You won’t overpay for a new car that will lose almost all its value while you own it, and you won’t get stuck driving the same car for the better part of a decade like you do with most car loans. That’s because if your situation changes, you can simply walk away from your Fair car if you give them just five days’ notice.

To get started with Fair, just download the app and enter your phone number to start shopping cars from top dealers in your area. You'll make a one-time Start Payment, refundable security deposit and your first month's payment to reserve the one you want. Then just sign for it right in the app and pick up your keys! It’s the simple, new way to drive, while keeping almost all of your automotive expenses in one, easy-to-track place.

Want a car with monthly payments designed for you? Shop Fair today!

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