How Much Car Can I Afford?

See how much car you can afford from your take-home pay: the price a monthly repayment buys with your deposit, trade-in and car loan rate.

Take-home pay

A month, after tax

On car payments

$400 a month

Deposit

Trade-in

What your car is worth

Interest rate

A year

Loan length

More options· $300 running costs

Running costs

A month: insurance, fuel or charging, repairs

Fees

Registration and dealer fees

You can afford a car up to

$22,348

With $3,500 up front and $400 a month for 5 years at 9.95%

You borrow: $18,848
Interest: $5,152

With running costs, the car would cost you $700 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.

Next step

How it adds up

You borrow	$18,848
Up front	$3,500
Car price	$22,348
Total interest	$5,152
Everything you pay	$27,500

Where the money comes from

Deposit$3,500
Loan$18,848

Assumptions in this estimate

A fixed-rate loan repaid monthly, with the deposit and trade-in paid towards the car. The starting rate is a typical one: Vehicle loans from banks and finance companies typically start at around 9% to 10% a year.
Advertised car prices already include VAT or GST.
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.

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How the calculator works

Your payment: a share of your take-home pay, 10% to start.
What it borrows: the loan that payment repays over the term, at the rate you enter.
The car price: the loan plus your deposit and trade-in, less any fees.
All car costs: the payment plus insurance, fuel and repairs, as a share of your pay.

Example

On take-home pay of $4,000 a month, 10% is a payment of $400. Over 5 years at 9.95%, with a $3,500 deposit, that buys a car of up to $22,348, and you’d pay $5,152 of interest.

Ways to afford a better car

Save a bigger deposit: every $1,000 more adds $1,000 to the price without adding interest.
Improve your rate: compare a bank or credit union loan with the dealer’s offer before you go.
Look at nearly new: a car a few years old has already lost much of its value.

Learn more

See our car loan calculator for the repayments on a particular car, the personal loan calculator, and the budget calculator.

Last updated October 27, 2026

Frequently asked questions

How much should I spend on a car?

A common guide is to keep car payments to about 10% of your take-home pay, and everything the car costs, including insurance, fuel and repairs, under about 20%. On $4,000 a month, that’s a payment of up to $400.

How long should a car loan be?

As short as you can manage. A 3 or 4-year loan costs much less interest than 6 or 7 years, and you’re less likely to owe more than the car is worth if you need to sell it.

Are on-road costs included?

Dealer prices include GST, and often registration and a warrant of fitness. Add anything that isn’t included, such as a dealer fee, under fees.

Is it better to buy a new or used car?

A car loses a large part of its value in its first few years, so a good used car can cost far less for the same monthly payment. New cars often come with lower dealer finance rates and a warranty, which can narrow the gap.