A month, after tax
$450 a month
What your car is worth
A year
Your state and local rate
More options· $350 running costs
A month: insurance, fuel or charging, repairs
Registration and dealer fees
You can afford a car up to
$25,936
With $3,500 up front and $450 a month for 5 years at 7.54%
- You borrow
- $22,436
- Interest
- $4,564
With running costs, the car would cost you $800 a month, 18% of your take-home pay.
What this means
A common guide is to keep car payments to about 10% of your take-home pay, and everything the car costs, with insurance, fuel and repairs, under about 20%. A car loses value from the day you buy it, so the less of your income it takes, the more is left for things that grow.
A shorter loan costs less interest and means you won’t owe more than the car is worth. Stretching to 7 years lowers the payment but adds interest, and you may still be paying when the car needs costly repairs. A good used car can cost far less for the same payment.
How it adds up
| You borrow | $22,436 |
| Up front | $3,500 |
| Car price | $25,936 |
| Total interest | $4,564 |
| Everything you pay | $30,500 |
Where the money comes from
- Down payment$3,500
- Loan$22,436
Assumptions in this estimate
- A fixed-rate loan repaid monthly, with the down payment and trade-in paid towards the car. The starting rate is a typical one: New 60-month car loans at banks averaged 7.54% in August 2026 (Federal Reserve).
- Sales tax is charged on the full price; many states tax only the price after the trade-in, which would let you spend a little more.
- Your actual rate depends on your credit, the lender and the car’s age. Dealers may offer lower rates on new cars, sometimes in place of a discount.