Car Affordability Calculator
Find out the maximum vehicle price you can afford given your monthly budget. Factors in down payment, trade-in, sales tax, and fees.
How to use this calculator
Enter the monthly payment you're comfortable with, your expected interest rate, and loan term. Include any down payment, trade-in, sales tax rate, and fees. The calculator reverses the auto loan math to show the maximum vehicle price your budget supports.
The 15% rule for transportation
Personal finance orthodoxy suggests keeping total transportation costs — loan payment, insurance, fuel, maintenance — under 15% of your gross (some use 20% as the limit). On a $75,000 salary, that's $940/month for everything. Subtract $200 for insurance and $250 for fuel/maintenance, and your loan payment lands around $490 — supporting a ~$20,000 vehicle on a 60-month loan at typical rates.
New vs used vs leased
New cars offer warranty peace of mind and the latest features but take the biggest depreciation hit. Used cars (especially 2-3 year old CPO) offer much better value per dollar spent. Leases are appropriate if you need a new car every 2-3 years and don't drive over the mileage cap — otherwise they're usually the most expensive option over time because you never build equity.
Down payment strategy
Target 20% down on a new car (10% minimum on used). This prevents being underwater in the first year when depreciation is steepest. It also lowers the loan, which lowers the monthly payment at any given rate. If you can't manage 10-20%, that's a signal to consider a cheaper car rather than a longer loan.
Shopping for a rate
Always get pre-approved before you walk into a dealership. Credit unions, online lenders (LightStream, PenFed), and your bank often beat dealer financing by 1-3%. A pre-approval also protects you from the dealer's "four-square" tactic where they negotiate price, trade-in, down payment, and monthly payment simultaneously to bury the actual cost.
Frequently asked questions
What's a reasonable monthly car budget?▾
A common benchmark: total transportation costs (payment + insurance + fuel + maintenance) should stay under 15% of take-home pay. On a $5,000/month take-home, that's $750 for everything transport-related. With insurance at $150 and fuel at $200, you'd have ~$400 for a loan payment — probably a $15,000-20,000 car financed over 60 months.
Is a 72- or 84-month loan ever a good idea?▾
Rarely. Longer loans lower monthly payments but keep you 'upside down' (owing more than the car is worth) for much longer. Depreciation outpaces principal payoff for the first few years. If you can't afford a car on 60 months, you probably can't afford that car.
Should I buy used or new?▾
Financially, used usually wins. New cars lose ~20% of value in year one and 40-50% by year five. A 2-3 year old used car avoids the steepest depreciation while still having most of its useful life. Certified pre-owned programs from manufacturers offer modern reliability with used-car pricing.
What are the hidden costs beyond the payment?▾
Insurance ($100-300/month), fuel ($100-300/month depending on miles and price), maintenance ($50-100/month average), depreciation (~$3,000-8,000/year for new cars), and registration/taxes. Total cost to own can easily be 1.5-2× the loan payment. Budget for all of it.
How does trade-in affect the calculation?▾
Trade-in acts like a second down payment — it reduces the amount you need to finance. In most US states, trade-in value also reduces the taxable amount (you only pay sales tax on the price difference), which can save hundreds. This calculator applies both effects automatically.
Related calculators
Auto Loan Calculator
Figure out your car payment, total interest, and the real cost of your auto loan. Include down payment, trade-in, sales tax, and fees.
Salary to Hourly Calculator
Convert between annual salary, weekly, and hourly pay. Account for hours per week, weeks per year, vacation, and holidays.
Credit Card Payoff Calculator
See how long it takes to pay off a credit card balance at a given monthly payment, and how much interest you'll pay along the way.