How much car can I afford on my salary?

Keep total monthly car costs (payment + insurance + gas + maintenance) at or below 15% of your gross monthly income for financial health, with 20% as the absolute maximum.

What's the 15/20% rule for cars?

The 15% rule means your total car expenses should not exceed 15% of gross income (recommended), while 20% is the absolute maximum before risking financial stress.

Should I buy new or used?

Used cars 2-3 years old offer the best value, as new cars lose 20-30% value immediately and depreciate 40-50% within the first three years.

How much should I put down?

Aim for a 20% down payment to avoid negative equity, lower monthly payments by $100-200, and secure better interest rates from lenders.

Is a 72-month loan a good idea?

Generally no—72-month loans cost significantly more in interest (often 30-40% more) and keep you underwater longer, unless you have 0% APR financing.

What's included in total cost of ownership?

Total cost includes purchase price, loan interest, insurance, fuel, maintenance, repairs, registration fees, and depreciation over the vehicle's lifetime.

Automotive Calculators

Auto Affordability Calculator

Determine how much car you can afford based on your monthly income, existing expenses, down payment amount, and credit score. Calculate maximum vehicle price, monthly payments, and total cost of ownership for smarter car buying decisions.

How to Use the Auto Affordability Calculator

Use the Auto Affordability Calculator to how much car you can afford based on your monthly income, existing expenses, down payment amount, and credit score. Calculate maximum vehicle price, monthly payments, and total cost of ownership for smarter car buying decisions.. Enter your values to get accurate, instant results tailored to your situation.

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Auto Affordability Guide

Buy smart, avoid debt traps

Expert Tips

Keep Total Costs Under 20%: All car expenses (loan + insurance + gas + maintenance) should stay under 20% of gross income. Going beyond this threshold creates financial stress and limits your ability to save for other goals.
Put Down 20% Minimum: Larger down payments prevent going underwater (owing more than the car is worth) and reduce both monthly payments and total interest paid. Never drain your emergency fund to make a down payment.
Stick to 48-60 Month Loans: Longer loan terms mean significantly more interest paid over time. While 72+ month loans lower monthly payments, you end up paying much more overall. Stick to 48-60 months maximum unless you have 0% APR.
Buy 2-3 Years Used: Used cars have already absorbed the steepest depreciation. Certified pre-owned vehicles 2-3 years old still have warranty coverage but cost significantly less than new, with lower insurance and registration costs too.

Essential Fundamentals — Budgeting basics

Affordability Guidelines

Income-Based Budget: Keep total car expenses (payment + insurance + fuel + maintenance) under 15-20% of gross monthly income. Going beyond 20% strains your budget and limits ability to save for other financial goals.
Purchase Price Rule: Affordable vehicle price is typically 35-50% of annual income with 20% down payment and reasonable loan terms. Consider your complete financial picture including existing debts and savings goals.
Hidden Ownership Costs: Beyond the purchase price, budget for sales tax, registration fees, insurance, fuel, and regular maintenance. First-year total costs are significantly higher than the sticker price alone.

Financing Fundamentals

Down Payment Benefits: Larger down payments reduce monthly payments, total interest paid, and prevent negative equity. Aim for 20% on new vehicles and 10-15% on used to get favorable loan terms and avoid being underwater.
Loan Term Trade-offs: Shorter loans mean higher monthly payments but less total interest paid over time. Longer terms reduce monthly costs but significantly increase total interest. Find the balance that fits your budget (typically 48-60 months).
Interest Rate Importance: Credit scores above 720 typically qualify for the best rates. Shop multiple lenders including credit unions, which often offer better rates than dealerships. Even small rate differences add up over the loan term.

Advanced Strategies — Save thousands

Smart Buying Tactics

Consider Used Vehicles: New cars depreciate rapidly in the first few years, with 2-3 year old vehicles offering the best value. Used cars have already absorbed steep initial depreciation while often retaining warranty coverage, with lower insurance and registration costs.
Negotiation Strategy: Negotiate the out-the-door price first before discussing trade-ins or financing. Research fair market value beforehand and get pre-approved financing from a credit union. Handle your trade-in separately for clarity and leverage.
Total Cost Analysis: Calculate 5-year ownership costs including purchase price, interest, insurance, fuel, and maintenance. Some brands cost significantly more to own despite similar purchase prices. Factor in fuel economy and typical repair costs for true comparison.

Frequently Asked Questions

How much car can I afford on my salary?: Keep total monthly car costs (payment + insurance + gas + maintenance) at or below 15% of your gross monthly income for financial health, with 20% as the absolute maximum.
What's the 15/20% rule for cars?: The 15% rule means your total car expenses should not exceed 15% of gross income (recommended), while 20% is the absolute maximum before risking financial stress.
Should I buy new or used?: Used cars 2-3 years old offer the best value, as new cars lose 20-30% value immediately and depreciate 40-50% within the first three years.
How much should I put down?: Aim for a 20% down payment to avoid negative equity, lower monthly payments by $100-200, and secure better interest rates from lenders.
Is a 72-month loan a good idea?: Generally no—72-month loans cost significantly more in interest (often 30-40% more) and keep you underwater longer, unless you have 0% APR financing.
What's included in total cost of ownership?: Total cost includes purchase price, loan interest, insurance, fuel, maintenance, repairs, registration fees, and depreciation over the vehicle's lifetime.