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How Much Car Can I Afford?

See how much car you can afford from your take-home pay: the price a monthly payment buys with your down payment, trade-in, auto loan rate and sales tax.

$

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.

Next step

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

Paying for the car
  • 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.
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How the calculator works

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

Example

On take-home pay of $4,500 a month, 10% is a payment of $450. Over 5 years at 7.54%, with a $3,500 down payment, that buys a car of up to $25,936, and you’d pay $4,564 of interest. In a state with 7% sales tax, the car itself could cost about $24,200, with the rest going on tax.

What your pay affords

Paying 10% of take-home pay, with $3,500 down, over 60 months at 7.54%:

Take-home a month Payment Car price Interest
$3,000 $300 $18,457 $3,043
$4,000 $400 $23,443 $4,057
$5,000 $500 $28,429 $5,071
$6,000 $600 $33,415 $6,085
$8,000 $800 $43,386 $8,114

These are prices before sales tax and fees, which come out of the same budget. New 60-month car loans at banks averaged 7.54% in August 2026, according to the Federal Reserve.

Longer loans buy more car, at a cost

A $450 payment, with $3,500 down at 7.54%:

Loan length You borrow Car price Interest
36 months $14,458 $17,958 $1,742
48 months $18,597 $22,097 $3,003
60 months $22,436 $25,936 $4,564
72 months $25,997 $29,497 $6,403
84 months $29,301 $32,801 $8,499

Stretching the same payment over more months borrows more, but a growing part of it goes on interest. With a long loan you’re also more likely to owe more than the car is worth for the first few years, which makes it hard to sell or trade in.

Count the running costs too

Insurance, fuel, maintenance, repairs and registration add up. The calculator adds them to the payment and shows everything as a share of your take-home pay: under about 20% leaves room for saving and other bills.

Ways to afford a better car

  • Save a bigger down payment: 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. A better credit score gets a lower rate.
  • 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 payments on a particular car, the lease vs buy calculator, and the budget calculator.

Last updated

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 $4,500 a month, that’s a payment of up to $450.

What is the 20/4/10 rule for buying a car?

A rule of thumb: put at least 20% down, borrow for no more than 4 years, and keep all car costs, including insurance, under 10% of your gross income. It’s strict, but it keeps a car from crowding out saving.

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.

Does a longer loan let me afford more car?

It does, but you pay for it. A $450 payment with $3,500 down buys about $22,100 of car over 48 months, or about $32,800 over 84 months, but the interest rises from about $3,000 to about $8,500.

Is sales tax included?

No: car prices in the US are quoted before sales tax, so enter your state and local rate. The calculator takes the tax out of your budget, along with any registration and dealer 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.