How Much Money Do You Need to Afford a Car?

💰Monthly car payments are just one aspect of the true cost of owning a car, which includes financing, gas mileage, insurance, maintenance, and depreciation.

📉A new car will depreciate 11% the moment you drive it off the lot, and up to 63% within five years.

🚗The 23/8 rule suggests putting 20% down, paying off the car in three years, and spending no more than 8% of your pre-tax income on transportation.

💵The 24/10 rule recommends putting 20% down, financing for no more than four years, and spending no more than 10% of your gross income on a car.

🚘The Dave Ramsey method advocates buying a car outright in cash, with a total value not exceeding half of your take-home salary.

What is the true cost of owning a car?

—The true cost of owning a car includes monthly payments, financing, gas mileage, insurance, maintenance, and depreciation.

How much does a car depreciate over time?

—A new car can depreciate 11% the moment you drive it off the lot, up to 63% within five years.

What is the 23/8 rule for buying a car?

—The 23/8 rule suggests putting 20% down, paying off the car in three years, and spending no more than 8% of your pre-tax income on transportation.

What is the 24/10 rule for buying a car?

—The 24/10 rule recommends putting 20% down, financing for no more than four years, and spending no more than 10% of your gross income on a car.

What is the Dave Ramsey method for buying a car?

—The Dave Ramsey method suggests buying a car outright in cash, with a total value not exceeding half of your take-home salary.

00:00Introduction to the video topic: How much money do you need to afford a car?

02:00Explanation of the true cost of owning a car, including financing, gas mileage, insurance, maintenance, and depreciation.

04:30Introduction to the 23/8 rule, which advises putting 20% down, paying off the car in three years, and spending no more than 8% of your pre-tax income on transportation.

06:45Introduction to the 24/10 rule, which suggests putting 20% down, financing for no more than four years, and spending no more than 10% of your gross income on a car.

09:15Explanation of the Dave Ramsey method, which encourages buying a car outright in cash and not exceeding half of your take-home salary.

10:30Conclusion and final thoughts on determining how much money you need to afford a car.

11:00Closing remarks and call-to-action to like the video.