Car Affordability Calculator – How Much Car You Can Afford

Choosing a car is not just about the model, trim and color. It is also a long-term budget decision. With prices and interest rates elevated, many drivers are wondering how much car they can realistically afford without putting the rest of their finances at risk. This car affordability calculator helps you turn a comfortable monthly payment into a realistic car price and loan amount, while checking how that payment fits against common income guidelines.

How this car affordability calculator works

This car affordability calculator is built around the same core math that lenders use to structure auto loans. Instead of starting with a car price and backing into the payment, it takes the approach most people care about: it asks what monthly payment fits your budget and then estimates how much car that payment can support, given your down payment, trade-in, tax rate and interest rate.

First, you choose a target monthly car payment, a loan term in months and an estimated APR for your auto loan. The calculator uses the standard fixed-rate loan formula to solve for the loan amount that those terms can support. If the APR is zero or very close to zero, it treats the loan as a simple payment times number-of-months calculation.

Next, it layers in your down payment and trade-in equity. Trade-in equity is the difference between what your current car is worth and how much you still owe on its loan. Positive equity helps you afford more car; negative equity (when you owe more than the car is worth) reduces how far your money goes and can be rolled into the new loan, which increases risk.

The calculator then applies your estimated sales tax rate to the car price and solves for a price that makes all of the pieces fit together: the loan amount, down payment, net trade-in and tax. The result is an estimated car price you may be able to afford, along with an approximate loan amount, total interest and tax amount.

Finally, the tool compares your chosen monthly payment to your monthly take-home pay. It shows your payment as a percentage of take-home income and benchmarks it against common affordability ranges. This is where you can see whether a payment that looks “fine” in isolation becomes aggressive once you consider your income and other bills.

How much of your income should go to a car payment?

There is no single rule that works for every household, but most reputable sources cluster around similar guidelines. Experian notes that a good rule of thumb is to keep total transportation costs, including your car payment, gas, insurance and repairs, to about 10–15% of monthly take-home pay. NerdWallet and Kelley Blue Book similarly suggest keeping the car payment itself near 10% of after-tax income, and total car costs under roughly 15–20%.

Another popular benchmark is the “20/4/10” framework. In its classic form, it recommends at least a 20% down payment, a loan term of no more than four years, and total vehicle expenses around 10% of your gross or net income. While many buyers today end up with longer loans, the spirit of the rule still highlights three important levers: down payment, term length and how much of your budget you are willing to devote to your car.

In practical terms, that means:

• If your car payment is under about 10% of take-home pay, you are likely in a conservative range, especially if you maintain an emergency fund and save for other goals.
• If your payment is around 10–15% of take-home pay, you are close to the middle of common guidelines. This may be fine for many households, but it can feel tight once you add gas, insurance and maintenance.
• If your payment is 15–20% or more of take-home pay, you are in a zone where the car may crowd out savings, debt payoff and other priorities. The risk is even higher if you are taking a very long loan term to make the payment work.

The calculator does not replace a detailed budget, but it makes these trade-offs visible. When you see that a planned payment represents 18% of your take-home pay, for example, you may decide to reduce the car price, extend the term modestly, or delay the purchase to save a larger down payment.

How to use the calculator to choose a realistic car budget

The most useful way to use this tool is as a planning sandbox before you ever set foot in a dealership. Start by entering your current monthly take-home pay and your existing fixed bills (rent or mortgage, utilities, student loans, child care and so on). From there, choose a monthly car payment that feels comfortable once everything else is covered. For many people, this lands somewhere below 10–15% of their take-home income.

Next, pick a loan term that matches how long you are willing to pay for this car. Industry data shows that terms over five years have become common, but those longer loans increase the total interest you pay and make it easier to end up “underwater” on the loan if the car loses value faster than you pay it down. If possible, keeping the term near four or five years strikes a balance between a manageable payment and not overpaying in interest.

Then, enter your expected APR. You can get a rough estimate by checking auto loan rates from banks, credit unions and online lenders, or by using prequalification offers if they are available without affecting your credit score. If your credit profile is weaker, it is safer to assume a higher APR so your affordability estimate remains conservative.

After that, add your planned down payment, your car’s trade-in value and the amount you still owe on your current loan. The calculator treats the difference as trade-in equity. If the value is negative, it shows how rolling that negative equity into your new loan affects the car price you can afford and your total interest cost.

Finally, enter your local sales tax rate on vehicle purchases. Sales tax can easily add hundreds or thousands of dollars to the amount you need to finance, especially on more expensive cars. By including tax, the calculator gets closer to what you will actually pay over the life of the loan.

Once everything is filled in, watch three key outputs: the estimated car price, the loan amount and total interest, and how your monthly payment compares to your take-home pay. If the price seems higher than you expected, consider lowering the payment target or shortening the term. If the payment ratio is above 15–20% of income, that is a signal to scale back the car price, improve your down payment, or both.