Car Affordability Calculator
Find the maximum car payment, loan amount, and target price you can afford — based on your income and loan terms.
The loan payment is just the beginning — insurance, fuel, and maintenance often double the true monthly cost of a car.
15%
Max monthly car payment as % of take-home pay — the standard affordability benchmark
20%
Recommended minimum down payment to avoid being underwater on your loan
7–9%
Average US auto loan interest rate in 2026 for buyers with good credit
What car ownership really costs
The numbers dealerships don't show you.
The hidden costs of car ownership
The loan payment is just the start. Add insurance ($150/mo average), fuel ($150–250/mo), maintenance ($75/mo), and registration. A $35,000 car with a $550 loan payment can easily cost $1,000/month all-in.
Depreciation is the real cost
New cars lose 15–20% of their value in the first year and up to 50% in 5 years. A $40,000 car is worth $20,000 after 5 years — that's $4,000/year in depreciation alone, before you've paid a cent in interest.
The 2-year-old sweet spot
Buying a car that's 2–3 years old captures most of the new car depreciation for the previous owner. You get a nearly-new car at 20–30% less than new, and it still has most of its useful life ahead.
How the Car Affordability Calculator Works
Formula
Max Monthly Payment = Monthly Income × 0.15
Max Loan Amount = Payment × (1 − (1+r)^−n) ÷ r
(present value of annuity formula)
Target Car Price = Max Loan ÷ 0.80
(assumes 20% down payment)Enter your monthly income
Your gross monthly take-home pay.
Choose loan term
Shorter terms (36–48 months) save interest. Longer terms lower payments but cost more overall.
Enter interest rate
Check current rates — 7–9% is typical for good credit in 2026.
Read your max numbers
Maximum monthly payment, loan amount you qualify for, and target car price assuming 20% down.
The 15% rule is a guideline, not a hard limit. It's designed to prevent you from becoming 'car poor' — spending so much on a vehicle that it limits your ability to save or handle unexpected expenses.
This calculator focuses on loan affordability only. Factor in insurance, fuel, and maintenance separately — those costs can add $400–600/month to the true cost of ownership.
Frequently Asked Questions
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