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What is the 1/10th rule for car buying?
Can you explain this rule to me, and how it can be beneficial?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“To prevent stretching yourself too thin financially, the 1/10th rule for buying cars dictates that you should only spend 1/10th of your gross annual income on a vehicle, whether new or used. For example, if you make $60,000 annually, you should only spend $6,000 on a vehicle.
In a spending culture such as the one in the U.S., this may seem substantially lower than what you’d expect. But the upside is that you won’t feel any pinch financially if you lose your job or income.
“
View full answer
- Gregory R.
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