Car budget calculator
Experts suggest that you shouldn't spend more than 20% of your take-home pay on monthly auto payments and related expenses. To get a realistic idea of how much car you can afford, consider your available down payment or trade-in value, the interest rate you qualify for, and your preferred loan term. These determine your monthly payment, but you must also factor in additional costs like insurance, fuel, maintenance, taxes, and registration.
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Car affordability calculator
Use our calculator to estimate how much you can spend on a car based on your preferred down payment, monthly payment, interest rate, and loan term.
This calculator is for illustrative and educational purposes only. Its accuracy and applicability to your circumstances is not guaranteed. You may wish to consult your own adviser regarding your particular circumstances.
How to calculate how much car you can afford
To estimate how much car you can afford, focus on these three factors:
- Down payment and trade in value: The more you put down upfront, whether it's in cash or through a trade-in, the less you need to borrow, resulting in lower monthly payments.
- Interest rate: Your annual interest rate is the cost of borrowing money. It's determined in part by your credit score, though market conditions also play a role.
- Loan term: This is the length of your loan, typically between 24 and 84 months. Longer terms reduce your monthly payment, but increase the total interest paid over time.
Other costs of car ownership to consider
In addition to your monthly car payment, consider these other costs of ownership:
- Insurance: Your premium may change when you add a new car to your policy, especially if it's financed as lenders typically require you to carry comprehensive and collision coverage in addition to liability insurance. You can use your current rate for budgeting purposes, but there are also ways to lower your rate, including qualifying for discounts, taking driving courses, or increasing your deductible.
- Fuel and maintenance: These costs vary based on the vehicle type. For example, a full-size SUV usually uses more fuel than a compact sedan. You should also account for routine upkeep like oil changes, tire rotations, and brake inspections.
- Title, registration, and taxes: Expect to pay initial fees for your car's title and registration as well as applicable taxes. According to AAA's 2024 Your Driving Costs study, drivers spend about $815 per year on license, registration, and taxes.
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