The average new car payment in the US hit over $730/month in 2026 — a record high. The average used car payment sits around $520/month. Whether those numbers are "good" or not has nothing to do with the national average. A good car payment is one that fits your specific income, not someone else's.
A car payment is good when it meets all three of these criteria:
A $650/month payment on a $90,000/year salary is very manageable. The same $650/month on a $45,000/year salary is a serious financial strain. The payment amount alone means nothing without the income context.
Here's what a sustainable car payment looks like at different income levels, using 10% of gross monthly income as the payment ceiling and assuming insurance costs of $150–$200/month:
| Annual Income | Monthly Gross | Max Car Payment | Car Price This Supports |
|---|---|---|---|
| $35,000 | $2,917 | ~$140–$190 | ~$10,000–$13,000 |
| $50,000 | $4,167 | ~$215–$265 | ~$14,000–$18,000 |
| $60,000 | $5,000 | ~$300–$350 | ~$18,000–$23,000 |
| $75,000 | $6,250 | ~$425–$475 | ~$25,000–$30,000 |
| $100,000 | $8,333 | ~$580–$630 | ~$35,000–$40,000 |
| $150,000 | $12,500 | ~$1,000+ | ~$55,000–$65,000 |
These numbers assume a 60-month loan at 7% interest and a 20% down payment. Higher interest rates or shorter down payments reduce the car price you can afford at any given payment level.
Rule of thumb: keep your car payment under 10% of gross monthly income, and keep total car costs (payment + insurance + gas + maintenance) under 20% of take-home pay.
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Car Loan Calculator →Car dealers use monthly payments as their primary sales tool — and for good reason. A buyer focused on "I can handle $500/month" can be steered toward a much more expensive car by simply extending the loan term. The math: a $30,000 car at 7% over 60 months costs $594/month. The same car over 84 months costs $452/month. The monthly payment drops by $142, but you pay an extra $3,600 in interest and spend 7 years paying off a car instead of 5.
Always negotiate the total price of the car, not the monthly payment. Once you have an agreed price, then calculate what that costs per month on a 48 or 60-month loan. If it doesn't fit your budget, the car is too expensive — don't stretch the term to make it "fit."
Your credit score determines your interest rate, and that has a major impact on your monthly payment. On a $25,000 loan over 60 months:
| Credit Score | Typical Rate | Monthly Payment | Total Interest |
|---|---|---|---|
| 750+ (excellent) | ~5.5% | ~$479 | ~$3,740 |
| 700–749 (good) | ~7.0% | ~$495 | ~$4,720 |
| 650–699 (fair) | ~10.5% | ~$537 | ~$7,220 |
| 600–649 (poor) | ~14.5% | ~$587 | ~$10,220 |
The difference between excellent and poor credit on a $25,000 loan is over $100/month and more than $6,000 in total interest. If your credit score is below 680, improving it before buying can save you thousands.
Used cars have lower sticker prices, which means lower loan amounts and lower payments — but the interest rate is typically higher for used car loans (lenders consider them riskier). A new car at a lower interest rate can sometimes have a similar payment to a more expensive used car at a higher rate.
For example: a new $22,000 car at 5.9% over 60 months costs $424/month. A used $18,000 car at 9.5% over 60 months costs $378/month. The payment difference is only $46/month, but the new car is $4,000 more expensive and may have a longer useful life. The math doesn't always favor used — run the actual numbers for your situation.
There are limited situations where a higher car payment makes financial sense:
Your car payment is too high if any of these apply:
If you're already locked into a high payment, options to reduce it include:
Use our car affordability calculator to find the right price range based on your income.
Car Affordability Calculator →