What percentage of income should I spend on a car?

Most financial planners suggest keeping total vehicle expenses (payment, insurance, fuel, maintenance) at or below 15-20% of your monthly take-home pay. The lower end of that range leaves more room for savings, debt paydown, and other expenses. In NJ, where car insurance rates are among the highest in the country, the 15% figure is a useful target because insurance alone can run $1,500-$3,000 per year, which eats into the total car budget more than drivers in lower-premium states experience. The key is to calculate the total number, not just the monthly payment, before committing to any vehicle.