Car Affordability Calculator
Enter your income, car price, and financing details to see if you can truly afford the car — including loan payment, insurance, and fuel.
18% of car price
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The most widely cited rule is the 15% guideline: your total monthly car payment should not exceed 15% of your gross monthly income. On a $5,000/month income, that's $750/month. Some advisors use the stricter 10% rule, especially if you have other significant debts. A separate heuristic — the 20/4/10 rule — suggests putting 20% down, financing for no more than 4 years, and keeping total car costs under 10% of gross income.
True Cost of Car Ownership
The sticker price is only part of the story. On average, US car owners pay $150/month for insurance, $130/month for fuel, and $80/month for maintenance and repairs. For a newer vehicle add depreciation — new cars lose 15–25% of value in the first year. When you add all these up, a $28,000 car with a $530/month loan payment can easily cost $1,000+/month to own. Our calculator shows you this total picture so there are no surprises.
New vs Used: Which Is Smarter?
New cars offer lower interest rates (often 4–6% vs 8–12% for used), warranty coverage, and the latest safety features. Used cars cost significantly less upfront and depreciate slower — a 2–3 year old car with 30,000 miles often sells for 30–40% less than new. For budget-conscious buyers, a certified pre-owned (CPO) vehicle combines used-car pricing with a manufacturer warranty — often the best value proposition.
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