Cars: How Much is Too Much?


I will be in the market for a car this year, and I’ll be paying cash. I have had older cheap cars in the past and found that it was a detractor from my happiness, so I’m not interested in going that route. (I actually have something very specific in mind, but I’ll keep it out of the discussion for the time being.)

My question is this: where/how do you draw the line on how much is Too Much to spend on a car? I’m sure I’ve read many opinions on the subject already, but I’m still slightly struggling with the amount that I’m planning to spend, and I’d be curious to hear your thoughts.

The question is probably not for the people with no car, or people who are happy driving around a $2,000 car. I’m definitely going to spend some money, and likely what would be considered by many to be a significant amount, and I’m fine with that.


I guess it all depends on your comfort level with how much could go wrong. I found a good sweet-spot in the $5000 - $6000 range, usually with 60 - 80k miles on them. I bought three Fords in this zone and got many many years out of them, with minimal issues. Could I have gotten lucky? Perhaps a bit, but it also helps to know something about cars and engines so that when you’re looking under the hood you can spot alarm bells.


I like to buy a car that has around 20-40k miles on it. Great discount range and car is broken in enough to determine it is not likely a lemon while still having tons of life left in it. I think it is fine to spend up to 20k. Just my input.


Financial Samurai has a good rule of thumb: no more than 10% of gross annual income. See below.


Yeah, I’ve read that a couple times. Honestly I think it’s pretty silly.


So I’m probably the worst person to answer this because I am a “car guy”. I love cars. I have always worked on them and love seeing the brand new cars that are released. I spent 10k for my rebuilt 2013 Mitsubishi Lancer Evo with under 4,000 miles on it. Killer deal (I bought it in 2013).

But to answer your question anything over 20% (maybe 30%) of your gross annual income I think would be pushing the limits. And again I love cars… so I’m going to be spending more on a car than I would with clothing, entertainment, travel or other expenses for the year.


Here are my two cents on the subject…


I’m not sure the % of income guidelines are particularly useful. Buying a car at 10% of income every year is far worse than spending 30% of income and keeping it for 10 years.

Seems to me that figuring out an annualized % of income over the life of the car would be better. I’m still not sure what’s reasonable though. @MaxYourFreedom - your numbers seem like a good start.

  1. only you can decide how much is too much
  2. You’ve already decided what you want
  3. You’ve made this post because you want to justify spending ‘too much’ (see #1)

Not much anyone can do to help sway you here.


Who said I wanted anyone to sway me?
I just asked for opinions.


and I shared mine?


That article talked me out of a Tesla model 3. I’m so happy it did. Still got an electric car but for 8k


What did you get for $8k?


a little over a year ago I got a wholesale (i know a guy) used 2015 Nissan Leaf (~20k miles). If I remember correctly they were selling them to normal customers for around 12-13k.


I would say go for whatever makes you happy since you are paying cash anyway, and not financing it. And I’m assuming your all your finances are in order.

For us, we prefer to go for the cars we love that we can see ourselves still happily driving 15-20 years from now. We would rather take a bus than drive a car we are not in love with :slight_smile:


I usually shoot for the place where happiness and value intersect. You’ll notice that this will be largely subjective but my method is looking at the price point of vehicles in the class & quality I am looking for while narrowing down what it is I truly want.

I don’t use any % of income or other metrics to decide. I simply look at what I want, what is available (including price) and find the happy medium.

As long as the rest of your financial picture is g2g get whatever you want!


We have found that the 5 to 8k range is ideal. You can find a nice-looking, nicely-equipped, relatively-new car in that range. It will still have low mileage and will not require many repairs for a good 5 years if you pick a reputable brand (ei. Japanese)


Everything depends on your budget and affordability. If you have the money, I don’t think there is any cap on what you can spend to make you happy. However, as a personal finance blogger, I will not expect that you lavish your hard earned money on car which is a wasting asset. On the other hand, if you buy a car that is too cheap, you may end up spending so much on repairs. You should also consider the amount you will likely pay on insurance on the type of the car you have in mind.


Tough topic. This is the one area where I don’t really follow sound financial advice, but I waited til I finished training and used 5% of my bump in pay to start paying a monthly car payment (I know, yikes!). I’m still going to be FI in my early to mid 40s (finished training at age 32).

That said, I bought a Chevy SS. Admittedly, I am a car guy, too. So, this was the one area where I bent the rules and applied The 10% Rule I teach on my website.


I think it all depends on how much of your net worth you want going down in value. If you have a higher net worth, it will become a smaller percentage and therefore, can be a bigger amount and not detract from your net worth growth.

Personally, we drove around the $1,000-$3,000 beater vehicles until we had kids. Since then, we’ve saved up and purchased 2 $8,000-$12,000 vehicles. Currently these 2 vehicles are down to being worth about $8,000 combined. Our net worth is over $120,000 currently, so this is about 6.7% (8,000/120,000) of our net worth value. I’m fine with that.

You have to find what you are comfortable with though and what you are looking to accomplish out of this purchase.