“Is $350 too much for a car payment on a $1,000-$2,000 monthly income?” I need a car but don’t want to overspend. What’s the right amount to pay?

Hi Money Minder,

I really need a car but I’m only making $1,000-$2,000 a month right now. The good news is I don’t have any bills because I still live with my mom. She’s going to co-sign a car with me since I have new credit and won’t get approved for much on my own. She’s even helping out by paying for the car insurance while I cover the car payment, gas, and maintenance. I found a car with a $350 monthly payment for a 72-month term – is that too much? What should I aim for instead? Right now, I’m saving 70% of my checks for a future house, 10% for my girlfriend’s student loans, and splitting the rest between our checking accounts. Once I have a car payment and other bills, I’ll need to adjust my budget. Any advice for me?

Farewell,
Thrifty Car Seeker

Response from THE MONEY MINDER:

Hello There,

I understand your need for a car and the financial considerations you are currently facing. It’s great that you have a supportive mom who is willing to cosign for you. In terms of your budget, it’s important to ensure that you are not overextending yourself with a $350 car payment for a 72-month term, especially considering your income level.

Considering your current income and financial goals for long-term savings and helping your girlfriend with her student loans, it would be more advisable to look for a more affordable car payment that fits within your budget. Your current savings plan is commendable, and you would need to reevaluate your budget to accommodate the addition of a car payment and potential other bills that may arise.

A practical approach would be to look for a car that fits your budget comfortably, maybe considering a shorter loan term or exploring different financing options to find a more affordable monthly payment. Also, it could be beneficial to allocate a portion of your current savings towards a down payment to reduce the overall cost of the vehicle and potentially lower the monthly payment amount.

It’s essential to have a realistic view of your financial situation and make decisions that align with your income and financial goals. As you mentioned, you will need to rework your budget once you have a car payment and other expenses to ensure financial stability and continued savings for your future plans. All the best from THE MONEY MINDER.