Car Affordability Calculator
The true cost of a car goes far beyond the monthly payment. Insurance, gas, maintenance, registration, and depreciation add $400–$700/month on top of the loan. This calculator shows the complete picture and whether a car fits your budget using the 15/20% income rule.
Enter your income, the car price, and ongoing costs to see total monthly ownership cost, 5-year total, and whether this car fits your budget.
The 15/20% Rule: How Much Car You Can Really Afford
Financial advisors commonly recommend keeping all car-related expenses — loan payment, insurance, gas, maintenance, and registration — under 15% of gross monthly income (conservative) or 20% (moderate). For someone earning $6,000/month gross, that means total car costs of $900–$1,200/month. Most people violate this guideline significantly without realizing it.
The alternative rule from the 20/4/10 framework: total monthly transportation cost (payment + insurance only) should be under 10% of gross income. At $6,000/month, that's $600/month for payment and insurance combined. This is stricter but leaves more room for gas, maintenance, and other financial priorities.
The True Cost of Car Ownership
The monthly payment is the most visible cost but often not the largest. Consider all costs for an average $32,000 new car:
- Loan payment: ~$635/month (5yr at 7.5%)
- Insurance: $150–$250/month (varies by age, record, coverage)
- Gas: $100–$200/month (varies by MPG and miles driven)
- Maintenance: $100–$150/month (oil changes, tires, brakes — averaged monthly)
- Registration/taxes: $50–$150/month (varies by state)
- Depreciation: Approximately $4,000–$8,000 in year one (not a cash cost but real wealth loss)
Total visible monthly costs: $1,000–$1,400/month for a typical $32,000 vehicle. At $6,000/month income, that's 17%–23% of gross income — above the 15% conservative guideline.
| Annual Income | Max Monthly Car Budget (15%) | Max Loan Payment (after ins/gas) | Recommended Max Price |
|---|---|---|---|
| $50,000 | $625/mo | ~$225/mo | ~$11,000 |
| $75,000 | $938/mo | ~$538/mo | ~$26,000 |
| $100,000 | $1,250/mo | ~$850/mo | ~$42,000 |
| $150,000 | $1,875/mo | ~$1,475/mo | ~$72,000 |
For a comprehensive guide on how much car you can afford and the trade-offs between buying and leasing, read how much car can I afford. For the buying vs. leasing decision with real numbers, see buy vs. lease a car.
Frequently Asked Questions
How much car can I afford?
Keep total car expenses (payment + insurance + gas + maintenance) under 15%–20% of gross monthly income. For $6,000/month income, that's $900–$1,200/month total. The 10% rule for just payment + insurance gives a tighter budget that leaves more room for other priorities.
What is the 20/4/10 car rule?
Put at least 20% down, finance for no more than 4 years, and keep payment + insurance under 10% of gross monthly income. This results in faster equity building (less time underwater), lower total interest, and a monthly cost that doesn't crowd out other financial goals.
What is the true monthly cost of owning a car?
Beyond the loan payment: insurance ($150–$250/month), gas ($100–$200/month), maintenance/repairs ($100–$150/month average), and registration/taxes ($50–$150/month). Total monthly ownership typically runs $800–$1,500 for an average new car — often 40%–60% more than just the loan payment.
Is it better to buy new or used?
Used cars (2–4 years old) are typically 30%–50% cheaper with most depreciation already absorbed. New cars have full warranty, latest features, and no unknown history. For financial optimization, a 2–3 year old certified pre-owned (CPO) car offers used pricing with extended warranty coverage — often the best value.
How long should a car loan be?
48–60 months is the recommended range. Longer terms (72–84 months) lower monthly payments but increase total interest and leave you underwater for years (owing more than the car's value). Shorter terms (36 months) build equity faster and have lower rates but require higher monthly payments. Never stretch the term to buy a more expensive car than you can afford on 48 months.
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