TikToker Explains How Much Money You Need To Make A Year To Comfortably Afford A New Toyota Corolla
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Buying a new car is more than just choosing the right make and model. It’s a decision laden with financial implications that can have a lasting impact on your wallet. While the allure of a shiny new vehicle is universal, the wisdom behind such a purchase varies greatly from one individual to another.
Among the multitude of options, the Toyota Corolla stands out as a symbol of reliability and affordability. But what does it really take to make this iconic car your own, and how might it align with your financial goals? You might be surprised to learn what your yearly earnings should be to truly consider this popular vehicle a sound investment.
For many when car shopping, the answer lies in the trusted and efficient Toyota Corolla, the most sold car of all time. This iconic vehicle has won hearts worldwide for its affordability, reliability, and timeless appeal.
But what does it take to comfortably own one, and does it make sense for your wallet, especially in a time with skyrocketing inflation and interest rates?
A TikToker named Jaxon has crunched the numbers, breaking down the yearly earnings needed to make this popular ride yours in a way that’s an astute financial decision.
In a TikTok going viral, Jaxon shows that a spec model 2023 Toyota Corolla costs about $24,135.
Jaxon applies the 20/4/10 Rule for thinking about buying a car that you can afford. The rule is a simple formula to ensure you don’t get yourself underwater with “too much car” – 20% down, finance for 4 years, and keep payments under 10% of your income. This golden rule of car buying keeps your dream ride within reach, without steering your budget for other living costs like housing and healthcare off course.
A 20% down payment on a new Toyota Corolla breaks down to $4,827 at the time of purchase. This brings the total loan amount to $19,308.
With a 5% interest rate over four years, Jaxon shows how this brings the monthly payment to $444 a month. This doesn’t include the average maintenance costs, which breaks down to about $4,087 over 10 years. That breaks down to an additional $34 a month.
Insurance, in this example, will also add another $122 a month on average.
This brings the monthly payment on a new Toyota Corolla to about $600 a month.
Jaxon then explains how, sticking to the 20/4/10 Rule, if you don’t want the $600 monthly payment to be more than 10% of your monthly income, you need to make about $72,000 a year for a new Toyota Corolla to be a comfortable financial decision.
$72,000 a year to afford a basic Toyota Corolla is an eye-opener for many. But it tracks how many Americans are currently paying at least $1000 a month in car payments.
Jaxon’s TikTok suggests how many people are getting priced out of affording new cars, a deprecating asset, and why other options like buying used or leasing may be better.
Commenters are quick to point out how there are some variances in the price of the car, which doesn’t include taxes and dealer fees built into that $24,135 hypothetical price tag. Some suggest these fees would bring the price up $3,000.
Others suggest no one does four year car loans in 2023 due to the skyrocketing costs of new cars, rendering the utility of the 20/4/10 Rule ineffective for thinking about buying a new car.
In the ever-changing landscape of personal finance, the decision to buy a new car is never simply black and white. The Toyota Corolla, an emblem of efficiency and affordability, remains a compelling choice for many. Yet, as numbers reveal, even the most popular car in history requires thoughtful financial planning.
Whether guided by the 20/4/10 Rule or your own unique considerations, the road to car ownership is a journey that demands both the heart’s desire and the wallet’s wisdom.
Choose wisely, drive happily.