So you’re in the market for a new car, and your budget is set at $25,000 That’s great! But before you start browsing the lot, you need to figure out what your monthly payments will be After all, you don’t want to fall in love with a car that you can’t afford.
The good news is that a $25,000 car is a relatively affordable vehicle for most people. It’s well below the national average cost of a vehicle, which was $48182 in the first quarter of 2023 according to Kelley Blue Book.
However, just because you can afford the sticker price doesn’t mean you can afford the monthly payments. The amount you’ll pay each month depends on a few factors, including:
- The amount of your down payment: The more you put down, the less you’ll have to borrow, and the lower your monthly payments will be.
- The interest rate on your loan: The lower the interest rate, the less you’ll pay in interest over the life of the loan, and the lower your monthly payments will be.
- The length of your loan: The longer the loan, the lower your monthly payments will be, but you’ll end up paying more in interest over the life of the loan.
Let’s Do Some Math
To get a better idea of what your monthly payments might be, let’s do some math. Let’s say you’re looking at a $25,000 car and you have a down payment of $5,000. That means you’ll need to borrow $20,000.
Now, let’s say you can get an interest rate of 5%. If you take out a 60-month loan, your monthly payments will be $386.77. If you take out a 72-month loan, your monthly payments will be $34611.
As you can see, the length of your loan can make a big difference in your monthly payments. However, it’s important to remember that the longer the loan, the more you’ll pay in interest over the life of the loan.
Finding an Affordable Vehicle
If you’re looking to spend $25,000 or less, there are a few things you can do to find an affordable vehicle:
- Look for a private party seller: You can often find good deals on used cars from private party sellers. Just be sure to get the vehicle checked out by a mechanic before you buy it.
- Purchase a vehicle with a manual transmission: Vehicles with manual transmissions often come at a lower cost than those with automatic transmissions.
- Look for car auctions in your area: You can sometimes find great deals on cars at car auctions.
- Be flexible about what kind of car you drive: You don’t need to buy the latest and greatest model to get a good car. There are plenty of reliable and affordable used cars on the market.
- Ask local dealerships about old inventory: Dealerships may be more willing to haggle on older inventory that they’re trying to get rid of.
- Consider buying a car through Costco or Sam’s Club: These stores often offer discounts on cars to their members.
By taking these steps, you can hopefully find a car that’s well within your price range.
Additional Resources
Here are some additional resources that you may find helpful:
- NerdWallet Auto Loan Calculator: This calculator can help you estimate your monthly payments based on the amount you borrow, the interest rate, and the length of your loan.
- Edmunds: Edmunds is a great resource for car reviews and pricing information.
- Kelley Blue Book: Kelley Blue Book is another great resource for car reviews and pricing information.
Buying a car is a big decision, and it’s important to do your research before you make a purchase. By understanding the factors that affect your monthly payments, you can make sure that you choose a car that you can afford.
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What you should know about borrowing for a car
It could be beneficial to have a brief understanding of how auto loans operate if you have never financed a car. The majority of people apply for auto loans, typically at banks, credit unions, online lenders, or car dealerships, because they are unable to pay cash for a car or truck. When you’re approved, the lender provides a lump sum of money to pay for the vehicle you’re buying. You take possession of the car and begin monthly loan payments until the balance is paid off.
The monthly and total amount you pay for a car loan depends on a number of factors, some of which you have more control over than others. Our car loan calculator is a tool to try different values and plan for what you will spend.
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FAQ
How much is the monthly payment on a 25k loan?
How much should I put down for a $25000 car?
Is 25k expensive for a car?
How much is a monthly car payment on a 20k car?
How much would a $30,000 car cost per month?
This all depends on the sales tax, the down payment, the interest rate and the length of the loan. But just as a ballpark estimate, assuming $3,000 down, an interest rate of 5.8% and a 60-month loan, the monthly payment would be about $520.
What is the average monthly payment for a car loan?
Whether you have poor credit or are looking to refinance your current loan, it’s important to understand typical monthly payments and rates so you can feel confident that you are getting the best deal. The average monthly car payment for new cars is $726. The average monthly car payment for used cars is $533.
How do I calculate my monthly car loan payment?
Use our auto loan payment calculator to estimate your monthly car loan payment based on your loan amount, rate and term.
Can I get a car loan for a $25,000 car?
You’ll typically want to ensure that your auto loan and auto insurance payments don’t exceed around 10% to 15% of your monthly income. Based on this amount, a loan for a $25,000 car may or may not be affordable to you. And unfortunately, finding a cheap car can be a challenge.