What do you consider acceptable lease amount of your monthly income?

Off-Ramp
1

I’m sure everyone has varying degrees of this. 5, 10, 15%?

2

It’s a really subjective topic.

To some of us a vehicle is just a convenience but to some its effectively a second home and they will spend accordingly.

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3

10% is gonna be a pretty bad time for the rest of your financial life but I guess there are people that have 1000 dollar leases and 1000 dollar apartments.

10% of your gross income is also a bit diff than take home. 5% of gross income is prob a reasonable rule

4

Yeah I think 5% gross income is reasonable as well, assuming one has a reasonable mortgage or rent. If somebody is house poor then the car budget needs to be lowered.

5

I like the 1% rule

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6

Some suggest to take your monthly income and divide it by 10 and there’s your monthly with insurance and fuel.

7

I hope that net not gross.

8

What’s the 1% rule for cars? Never heard of that in a car payment context. Is that 1% of annual salary for car payment? I’d imagine it would be too low for most if it was 1% of monthly income…

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9

there is no such rule for car leases I believe. Too many factors to account for. From potential equity at the end of the lease, to things like taxes and deductions.

But on the other hand, at some point a while ago I’ve heard a generic rule.
Your home should not cost more than 3-6 annual gross incomes, your car should not cost more than 3-6 monthly gross incomes. Regardless of ownership type. (lease/own/finance/etc).

10

Net indeed, yes.

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11

It’s my own rule. Trying to pay 1% of gross income max on a car haha. More of a joke bc people all try and do the 1% lease rule. 1% payment of msrp.

There should be no rule for what you spend on a car. Some people it overlaps to their entertainment budget as well. People do spend wayyy too much of their income on transportation. I can tell you that by seeing credit profiles. 10% of net pay is prob the norm which is bonkers. That doesn’t include gas and insurance either.

Considering the median new car payment is 750/mo and the median yearly income is around 70k….well

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12

It depends how much you make. If you make 50k a year you cant afford as high a percentage as someone making 50k a month

13

I am in car sales, financial responsibility is not my strong suit. My car payments are nearly 2.5x my rent and I don’t have any plans on selling my cars.

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14

There are exceptions to every rule. That would be a bad idea for most folks.

15

On the flip side I have one mortgage just under at 32% of my pay and one at 11.3% a month but zero car payments.

Different strokes for different folks

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16

I try to keep it reasonable but I’d rather spend money on a car than foreign travel, alcohol, fancy clothes, etc

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17

Edmunds recommends a max of 15% of your monthly take-home pay for a new car payment if you buy. If you’re leasing or buying used, they recommend no more than 10% - to account for the other expenses (gas, insurance, maintenance).

Currently I’m at 13%, but will drop to 8% after switching cars. Which will be promptly be eaten by the CA insurance market as I’m moving from WA.

18

Under $500. Between 2012-2018 you could easily lease a MBZ, BMW, Lexus and others under $500 zero drives offs. I was telling this guy on LH forum that my best lease deals were:
-2012 MBZ E350 Sport: $299 a month zero down (24/12)

  • 2014 MBZ E350 Sport: $399 a month zero down (24//12)
  • 2015 Lexus G350 Fsport:$444 a month zero down (36/15)
  • 2018 Honda Clarity Plug in Hybrid Touring: $390 (900 Drive offs) (36/12)
    -2018 Mini Clubman S premium: $250 a month zero down (36/12)
    -2021 Kia Forte GT-Line Premium: $227 a month zero down (36/12) - Sons Car
    -2021 Chevy Equinox LT 2.0T 2LT: $256 a month zero down (36/12) - Wifes Car (we purchased after lease because leases terrible - same SUV was $150 more a month)
    -2021 VW Jetta SE with sunroof and upgraded stereo: $336 zero down (36/12) - Other sons car
    -2021 AudI A4 45TFSI Prem Plus: $434 a month $2500 drives offs (through Sam):36/12
    Third party sold the Honda and made $5K cash, Kia and VW positive equity $4K each.
    Then COVID hit and market went to crap and you know the rest of the story.
19

you sound like my grand parents when they could buy a house for $200 and a mortgage with a letter from their local church

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20

LH forum is a competition to get best lease deals which we should all strive for. And those deals were not that long ago.