How Much Would the Monthly Car Payment Be on a $50,000 Car?

The average price of a new car is just over $48,000 and could soon hit $50,000, according to industry experts. That's a lot of money to save up for a vehicle, so chances are good you'll probably have to borrow to buy it.

If you don't have the cash in a high-yield savings account and need a loan to get a new car, how much would the monthly payments be? Here's what you need to know.

This is how much a $50,000 car could cost you

When you buy a car, you'll typically need a down payment. Generally, you should aim to put around 10% down to help you qualify for the best rate on an auto loan. This will also ensure you don't find yourself owing a lot more than the car is worth, since vehicles depreciate (or go down in value) pretty fast.

So, if you wanted to buy a $50,000 car, you should save up around $5,000 for the down payment. That would leave you with a car loan balance of $45,000. And the monthly payment on that amount would vary depending on two factors: the interest rate you were offered and the term of your car loan.

The table below shows how much your monthly payment and total interest costs would be at different loan rates with different term lengths (including if you borrowed at 6.07%, which was the average loan rate to buy a new car as of the end of 2022):

As you can see, a longer payoff term comes with lower monthly payments that could be more affordable. But you significantly increase your interest costs over time if you take many years to repay a loan.

And even with a pretty reasonable interest rate and a long payoff time, the monthly payments on a $50,000 car are still very expensive.

Can you afford a $50,000 car?

In general, you should try to keep your monthly car payments to 10% of your take-home income or less. If you wanted to stick to this rule of thumb and buy a $50,000 car, you would need a monthly take-home income of at least $7,240 if you got a car loan at a below-average rate and stretched out your payoff time for a long time.

Many people will find that purchasing such an expensive car really isn't affordable. If that's the case, that's OK. You have a few options, including:

• Buying a less expensive used car. This is often your best bet, since cars depreciate quickly and you take a huge financial hit if you buy brand new.
• Saving up to buy a more expensive car so you don't have to borrow as much. If you want a nice new car, there's nothing wrong with prioritizing this in your budget and saving up enough money to make a larger down payment so you can purchase the car and keep your monthly payments reasonable.

One technique that worked great for me was buying a cheap used car, paying it off quickly, and then continuing to make "monthly car payments" into a savings account (basically diverting the money I was using to make car payments into savings).

After driving the reliable used car for a long time, I ended up with enough money to buy a really nice used car for cash, which I drove for well over a decade while continuing to make "car payments." That, in turn, gave me a big enough balance to finally buy the brand-new car with cash that I'm driving now.

Committing to a huge car loan you might not be able to afford is not a smart financial move, so you may want to try my approach -- especially with the price of new cars climbing to a point where borrowing for them may be beyond reach.