How Much Car Can A $70k Salary Buy In Your State? - The European Financial Review (2024)

How much car can a $70,000 salary buy? That’s a question that many people are asking these days. The answer may surprise you!

Let’s take a look at what kind of car you can buy with a salary of $70,000. We will also discuss some of the factors that play into how much car you can afford. So, whether you’re thinking about buying your first car or just curious about what’s out there, read on for more information!

The 20/4/10 Rule of Car Buying

When it comes to car buying, there’s a general rule of thumb that many people follow: 20% down payment, 4-year loan, and 10% of your monthly income. This rule is often referred to as the 20/4/10 rule, and it can be a helpful way to keep your car purchase affordable. You can use a car payment calculator to see how it works:

For the down payment, you’ll want to put down at least 20% of the total cost of the car. This will help you avoid having to finance too much of the purchase price, which can lead to higher interest payments.

As for the loan length, most financial experts recommend keeping it at four years or less. This will help you keep your monthly payments lower and pay off the loan more quickly.

Finally, 10% of your monthly income should be the maximum you spend on your car payment and related expenses like insurance and gas. By following this guideline, you can help ensure that your car purchase doesn’t stretch your budget too thin.

Using the 20/4/10 rule and a $70k salary

If your annual salary is $70,000 and you’re looking to buy a car, here are the calculations for using the 20/4/10 rule.

A monthly salary (70,000/12) = $5,800

Best Cars to Buy Under $20k

You don’t have to spend a lot of money to get a great car. In fact, there are plenty of great options out there if you’re working with a budget of $20,000 or less. If you’re looking for a reliable and stylish ride, here are four of the best cars you can buy for under $20,000.

The Honda Civic is one of the most popular cars on the market, and for good reason. It’s reliable, efficient, and has a spacious interior. The Civic also comes standard with a number of features that are typically optional on other cars, such as Bluetooth connectivity and a rear-view camera.

The Toyota Corolla is another great option if you’re looking for a reliable and affordable car. Like the Civic, it’s fuel-efficient and comes standard with a number of features that are usually optional on other cars. The Corolla also has a spacious interior and a comfortable ride.

If you’re looking for an affordable SUV, the Honda CR-V is a great option. It’s one of the most popular SUVs on the market, and for good reason. It’s spacious, efficient, and comes standard with features like all-wheel drive and a rear-view camera.

How to Afford More Car

Save up more than 20% for a downpayment

If you want to follow the 20/4/10 rule but need to spend more, then you can choose to save up more than 20% for your down payment. For financial assistance, consider seeking help from a licensed money lender in Singapore. Doing so will help you keep your monthly payments low and avoid being upside down on your loan. Additionally, it’s a good idea to have an emergency fund in place before buying a car so that you can cover any unexpected repairs or maintenance costs.

Trade in your old car for more credit

One option is to trade in your old car for credit toward the purchase of a new one. Trade-ins are often calculated based on the Kelley Blue Book value of the vehicle, so it’s important to do your research before heading to the dealership. However, if you have an older car that isn’t worth much, trading it in may not be the best option. In such cases, it may be better to sell the car privately and use the proceeds toward the down payment on a new one.

Buy a used car to get more bang for your buck

Used cars are often just as reliable as new cars, and they come with the added benefit of being significantly cheaper. In fact, used cars are such a good deal that they often sell for less than their Kelley Blue Book value. You may be able to stay within the 20/4/10 rule by choosing a used car over a newer model.

Location affects Car Affordability

The average car costs around $30,000, but is this possible on a salary of $70,000. The answer is that this varies depending on location and other factors.

In expensive cities such as New York or San Francisco, the average person would only be able to afford a $20,000 car on a similar salary.
In rural areas or small towns however, the same person could probably afford a $50,000 car.
There are many things to consider when purchasing a new vehicle such as gas mileage, depreciation rates, and monthly payments.

It is important to do your research and find the best deal for you before making any large purchases.

If you’re looking to buy a car on a salary of $70,000, it’s important to do your research and find the best deal for you. Depending on your location, you may be able to afford a more expensive car. However, it’s also important to consider other factors such as gas mileage and depreciation rates. Ultimately, the best car for you is the one that fits your needs and budget.

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Sure, let's dive into each concept covered in the article:

1. The 20/4/10 Rule of Car Buying:

This rule suggests:
- Putting down at least 20% of the total car cost as a down payment.
- Limiting the loan duration to four years or less.
- Ensuring that car-related expenses don't exceed 10% of your monthly income.
Following this guideline helps in managing the car purchase affordably and avoids excessive financial strain.

2. Calculations for a $70,000 salary using the 20/4/10 rule:

With a $70,000 annual salary, the monthly car expense allocation would be $580.
Breakdown of estimated monthly expenses:
- Insurance: $57
- Car maintenance: $46
- Gas: $129
- Taxes and fees: $25
This leaves $323 for the monthly car payment.

3. Affordability estimation based on the 20/4/10 rule and a $70k salary:

Considering an average interest rate and using a car payment calculator, one could afford a car valued around $19,000 to $20,000.

4. Best Cars to Buy Under $20,000:

Four options highlighted include:
- Honda Civic: Known for reliability, efficiency, and standard features like Bluetooth connectivity and a rear-view camera.
- Toyota Corolla: Similar attributes to the Civic, emphasizing fuel efficiency and standard features.
- Honda CR-V: A popular, spacious SUV with efficiency and standard features like all-wheel drive and a rear-view camera.
- Toyota Camry: An affordable sedan with comfort, efficiency, and standard features like Bluetooth connectivity and an infotainment system.

5. Strategies to afford more car within the rule:

Save more than 20% for a down payment to reduce monthly payments.
Consider trading in an old car for credit toward a new purchase.
Opt for a used car to get more value for the money.

6. Location's impact on car affordability:

Affordability varies based on location.
In expensive cities, such as New York or San Francisco, a $20,000 car might be the limit on a $70,000 salary.
In rural areas or small towns, affording a $50,000 car might be feasible on the same salary.

7. Additional considerations when purchasing a car:

Factors to consider include gas mileage, depreciation rates, and monthly payments.
Research is crucial to finding the best deal tailored to individual needs and budgets.

The article essentially provides guidance on how to assess one's budget in relation to a car purchase, offers examples of cars under $20,000 that provide good value, and discusses strategies to maximize affordability while adhering to financial guidelines. It emphasizes the importance of considering various factors, including location, before making a substantial purchase like a car.