Car Affordability Calculator
Find out the maximum car price that fits your budget. Enter your take-home pay, down payment, loan rate, and term to see exactly how much car you can afford without stretching your finances too thin.
The 15% rule is a popular guideline for car affordability: your monthly car payment should not exceed 15% of your take-home pay. On a $4,500 monthly income, that means a maximum payment of $675. With a $5,000 down payment, 6.5% APR, and a 60-month loan, you can afford a car around $39,200.
Longer loan terms lower your monthly payment but increase total interest. A 72-month loan at 6.5% on $30,000 costs about $3,600 more in interest than a 48-month loan on the same amount. Financial advisors generally recommend keeping auto loans at 60 months or shorter to avoid being "underwater" (owing more than the car is worth).
Remember that the sticker price is not your only cost. Budget for insurance, fuel, maintenance, registration, and taxes. A common rule is that total car ownership costs run about 50% more than just the loan payment. If your max payment is $675, plan for roughly $1,000 per month in total car expenses.