Auto — Debt

Financial experts use different "rules of thumb" to define manageable auto debt:

: The length of time you have to pay back the loan. While longer terms (e.g., 72 or 84 months) lower your monthly payment, they significantly increase the total interest you pay over time. Strategic Debt Management How Do Car Loans Work? - Bank of America auto debt

: The actual amount of money you borrow to buy the car after your down payment. Financial experts use different "rules of thumb" to

: Some experts, like those at Edmunds , suggest your car payment alone should not exceed 15% of your take-home pay . Key Components of Auto Debt - Bank of America : The actual amount

: A more common guideline recommending a 20% down payment , a 4-year loan term , and a total transportation cost (including insurance and maintenance) of no more than 10% of your gross income .