When deciding how much to spend on a car, financial experts generally recommend the following guidelines:

• Spend 10-15% of your annual income on the car purchase price. For example, if you earn $60,000 per year, aim to spend around $6,000 to $9,000 on the car itself

• Use the 20/4/10 rule for financing: Make a 20% down payment, finance the car for no more than 4 years, and keep total monthly car expenses (loan payment, insurance, fuel, maintenance) under 10-15% of your monthly income

• Keep all car-related expenses (loan, insurance, fuel, maintenance) below 20% of your monthly income to avoid financial strain

• Consider total ownership costs beyond the purchase price , including insurance premiums, fuel, maintenance, taxes, and depreciation, as these can significantly impact your budget

• If buying used, you can often get more value within the same budget , but be sure to factor in potential maintenance costs

• Set a realistic budget based on your income and other expenses to ensure you can comfortably afford the car without sacrificing other financial goals

In summary, a practical approach is to allocate about 10-15% of your annual income for the car purchase and keep total car expenses under 20% of your monthly income. This balance helps you buy a reliable vehicle while maintaining overall financial health.