How to Afford a Car without Stressing Over It - The Half Percent Rule
- Benjamin Concepcion
- Mar 30
- 3 min read
Buying a car can be a tough decision, especially with so many opinions out there. It doesn't have to be that complicated! Here’s an easy way to figure out how much car you can actually afford as you start looking.
The "Half Percent Rule":
A simple way to figure out your monthly car payment is this:
Take your yearly salary and multiply it by 0.005.
This gives you a rough idea of a comfortable monthly car payment. Try plugging that into your budget and see how it feels and fits. It’s not an exact number, so feel free to go a little higher or lower.
This rule can help you estimate the price range for cars to consider based on how much you’re comfortable paying each month. Also, keep in mind:
For every $5,000 of the car’s price, it will be about $100 a month.
$10,000 car = $200 a month
$15,000 car = $300 a month
This is just a guideline to help you focus on price rather than getting caught up in the brand. Buying based on the brand can get you into trouble, leading to luxury cars that aren’t always practical. A price perspective is a business decision, and you always want to do what is best for the business of you!
Things to Avoid When Car Shopping:
Old Luxury Cars—Once these cars hit 100,000 miles, repairs can be costly and frequent. They might drain your wallet faster than you expect. They weren't designed to last; they were designed for the experience.
Electric Vehicles – They're still a bit tricky to repair, and many mechanics haven’t yet mastered fixing them outside of dealerships. Wait until the local mechanics (Tito's Shop) can figure out how to fix them, as they will be more affordable to maintain. Electric cars are too new for certain neighbors to get them on the low yet.
Brand New Cars – They lose value too quickly and they are over priced. But if you have the money to flex, all power to you.
Ignoring Your Mechanic’s Opinion – Instead of listening to everyone’s opinion, ask your local mechanic. They’ll know which cars hold up the best in the long run. If you don't have a relationship with a local mechanic, go ask them; it's a great way to get connected for future repairs/maintenance for the low.
What to Look for:
Cars with under 70k miles – This is a good balance between age and reliability.
Check the car’s consumer rating on websites like Kelly Bluebook.
Look for cars on the road that are older than you, but still running strong. These are usually reliable models.
If the Car Payment Doesn’t Fit Your Budget:
It’s okay! Don’t stress. You can skip financing a car for now. Consider alternatives:
Buy a cheap used car (a "hooptie") that runs well and won’t need repairs for at least a year.
Use public transport, bike, Uber, or carpool with a friend or colleague to work.
Your motive to buy will probably be centered on reliability, proud of you for seeking information that will level you up.
If You Have the Money to Flex:
If you can afford a higher monthly payment and want to splurge a little, don’t stress about the half-percent rule. Instead of committing to a $900 monthly payment for 5+ years, consider lowering that to $600, and use the extra $300 to subscribe to yourself and your goals. Money gets you to them faster anyway. You can still enjoy a nice car while investing in your future goals. Your motive to buy is probably focused on the experience/luxury, proud of you for being able to afford that.
In the end, make sure you’re making the right decision for your situation. You got this!
