To determine Maddie's maximum monthly car payment without going into credit overload, we first need to calculate her total monthly debt payments and ensure her debt-to-income ratio remains at a reasonable level.
Maddie's monthly take-home pay is $3,500.
Her current monthly debt payments are:
- Student loan: $250
- Credit card: $218
Total current debt payments: \[ 250 + 218 = 468 \]
Now let \( x \) be the maximum monthly car payment Maddie can afford. Therefore, the total monthly debt payments, including the car payment, will be: \[ 468 + x \]
To determine the maximum debt payment Maddie can afford, we can use a common recommendation that total debt payments should not exceed 36% of her gross monthly income. However, since we don't have her gross income, we will base it on what's reasonable while keeping her take-home pay in mind.
Assuming she wants to keep her total monthly debt payments (including the car payment) reasonable, we can initially consider what amount would provide a stable budget without going overly high into debt.
A common guideline is that you should not spend more than 15% to 20% of your take-home pay on debt payments. Let's calculate this as 20% for safety:
\[ 0.20 \times 3500 = 700 \]
Now we can set up the equation: \[ 468 + x \leq 700 \]
So, solving for \( x \): \[ x \leq 700 - 468 \] \[ x \leq 232 \]
Based on this, the maximum monthly car payment Maddie can afford without going into credit overload is $232.
Therefore, the correct response is:
- $232