How much car can I afford based on my income?

A common guideline is to keep the total price of your car at or below 15% of your annual income, and your monthly car payment within about 15% of your take-home pay. This calculator applies those rules along with your down payment, trade-in, and existing debts to recommend a maximum price.

What is the true cost of owning a car?

Beyond the loan payment, ownership includes insurance, fuel, maintenance, and registration. This calculator estimates each of these and adds them to your monthly payment to show a more realistic total monthly cost of ownership.

How does my down payment affect affordability?

A larger down payment plus any trade-in value reduces the loan amount you need to finance, which lowers your monthly payment and the total interest paid. The calculator factors both into your maximum affordable price.

Is a used car a better deal than a new car?

New cars lose roughly 15 to 25% of their value in the first year. The calculator estimates the value of a comparable three-year-old used car and the depreciation you avoid by buying used instead of new.

Car Affordability Calculator — How Much Car Can You Really Afford?

Find out how much car you can actually afford

Quick Answer

The general rule is to spend no more than 15% of take-home pay on total car costs including payment, insurance, fuel and maintenance. On a $5,000 monthly take-home that is $750 total. The average new car payment in 2025 is $738 per month — before insurance, fuel and maintenance which add another $400-600 monthly.

Car affordability goes beyond the monthly payment. The true monthly cost of car ownership includes the loan payment, insurance, fuel, maintenance, registration and depreciation. This calculator shows total monthly ownership cost and whether a vehicle fits your budget using the 15% of take-home guideline.

Built by Pierre — MBA, Business Strategist & AI Consultant, Founder of DayblipAbout the author →

Annual Income ($)Monthly Take-Home Pay ($)Existing Monthly Debt Payments ($)Down Payment ($)Trade-In Value ($)Interest Rate (%)

Loan Term

Based on the 15% income rule, you can afford:

$11,250

Max monthly payment: $124

💳 Loan Cost Breakdown

Purchase price$11,250

Down payment−$5,000

Trade-in−$0

Loan amount$6,250

Total interest+$1,175

Total Paid$12,425

🔍 True Monthly Cost of Ownership

Loan payment (P&I)$124

Insurance estimate$13

Fuel estimate$200

Maintenance (est.)$14

Registration (est. annual÷12)$9

Total Monthly$361

🔄 New vs Used Comparison

A 3-year-old used car worth approximately $6,750 saves you ~$4,500 in first-year depreciation alone. New cars lose 15–25% of value in the first year.

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Educational estimate only. Interest rates vary by credit score and lender. Actual insurance and fuel costs vary by location and driving habits.

Frequently Asked Questions

A common guideline is to keep total vehicle costs including payment, insurance, fuel, and maintenance below 15 to 20 percent of take-home pay. For a $4,000 per month take-home that is $600 to $800 per month total.

Car loan rates depend on credit score and loan term. With excellent credit above 750, rates in 2024 to 2026 have ranged from 5 to 7 percent for new cars. With fair credit between 620 and 680 rates can exceed 10 to 14 percent.

Buying is better long-term — you build equity and eliminate payments once paid off. Leasing has lower monthly payments but you never own the vehicle and face mileage limits and wear-and-tear charges. Buying used is typically the most cost-effective option.

A 20 percent down payment on a new car avoids being underwater on the loan since new cars depreciate 15 to 25 percent in the first year. For used cars 10 percent is a common minimum.