How Much Can I Afford For a Car? (With Calculator) (2024)

Lending Partner

Loan Term

Min. APR

Min. Credit Score

Highlights

Refinance LoanHow Much Can I Afford For a Car? (With Calculator) (1)

Loan Term48-84Months

APR5.29%

Credit Score550

Highlights

  • Average monthly savings of $150
  • Work with a personal loan concierge to compare options
  • A+ BBB Rating

Refinance LoanHow Much Can I Afford For a Car? (With Calculator) (2)

Loan Term12-84 Months

APR5.24%

Credit Score620

Highlights

  • Save on average $1,200 a year

  • Skip 90 days of payments

  • Get qualified online in minutes

New Car LoanHow Much Can I Afford For a Car? (With Calculator) (3)

Loan Term12-84Months

APR0%

Credit Score300

Highlights

  • Rates as low as 0% on select cars, trucks and SUVs
  • Free Online Quotes – Get Your CarsDirect Target Price Today
  • Local dealers compete to provide the best rates for new vehicles

New or Used Car LoanHow Much Can I Afford For a Car? (With Calculator) (4)

Loan Term12-84Months

APR5.49%

Credit Score575

Highlights

  • Below-average credit scores accepted
  • Great interest rates
  • Smooth and easy online experience

Refinance LoanHow Much Can I Afford For a Car? (With Calculator) (5)

Loan Term24-84Months

APR5.61%

Credit Score510

Highlights

  • No application fee
  • Lending platform that partners with banks
  • Approval and loan terms based on many variables, including education and employment

All APR figures last updated on 3/16/2024 – please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.

Purchasing a new or used car can come with a hefty price tag. According to Kelley Blue Book, the average new car price topped $48,334 in July 2023, while used cars averaged around $27,000 in August of 2023. With such steep prices, you may find yourself asking, “How much car can I afford?”

We at the MarketWatch Guides Team will explain how much you should spend on a car loan payment and your options for purchasing and financing a new or used car. When you’re shopping for a vehicle, it pays to compare the best auto loan rates and best auto refinance rates from providers.

Car Affordability Calculator

An auto loan calculator can help you determine the monthly payment and total cost of an auto loan you may qualify for. It uses factors such as your loan term, down payment and interest rate. Some calculators may also incorporate sales tax, fees, and your current vehicle’s trade-in value.

Auto Loan Calculator

New Loan

Refinance Loan

Purchase Loan Calculator

Price of the car you want

$

Down payment

$

Length of loan(months) 12

Annual interest rate

%

Your Credit Score

$ 0 /mo

Breakdown

Car price $ 0

Down payment $ 0

Length of loan (months) 0

Annual interest rate % 0

Total interest paid $ 0

Get Best Rates

$ 0 /mo

Breakdown

Loan Amount $ 0

Current Payment $ 0

New Payment $ 0

Monthly Savings $ 0

Total Savings $ 0

Refinance Calculator

Balance Left on Loan

$

Current Interest Rate

%

New Rate

%

Remaining Loan Terms in Months

New Loan Terms in Months 12

* The calculators used on this website are being provided for educational purposes only. Data will not be collected or stored. The results are estimates based on information you provide and may not reflect actual pricing of your quote.

4 Steps To Determine How Much Car You Can Afford

Calculating how much car you can afford may help you save time and money in the long run. Several factors affect your auto loan rate which includes:

  • Your loan amount
  • Your down payment
  • Your loan term
  • Your credit score
  • The type of vehicle you choose (lease, used or new)

To help you find your monthly budget, we’ve outlined four steps below.

#1 Calculate Your Monthly Car Payment

Use your annual income as a starting point to calculate how much car you can afford based on monthly payments. Financial experts recommend spending no more than about 10% to 15% of your monthly take-home pay on an auto loan payment. These percentages do not factor in total car expenses, including gas, insurance, repairs and maintenance costs.

The table below shows examples of annual salaries and the monthly payment amount you should not exceed for a car loan:

Monthly Take-Home Pay

(Post-Tax)

Monthly Car Payments Should Not Exceed…
$1,500$150 to $225 per month
$3,000$300 to $450 per month
$4,500$450 to $675 per month
$6,000$600 to $900 per month
$7,500$750 to $1,125 per month
$9,000$900 to $1,350 per month

Also, it’s important to be realistic about how long you want to make monthly payments. Most lending companies offer 24 to 84-month auto loansfor used and new cars. Choosing a longer loan term can help you get lower car payments, but you’ll pay more overall because of the additional interest that accumulates.

#2 Determine Your Fuel and Insurance Costs

Before you purchase or lease a vehicle, consider how much your fuel expenses will be and how much car insurance will cost. Both of these costs depend heavily on your situation, such as your location and driving history and the vehicle you’ve chosen.

The U.S. Department of Energy provides a detailed list of fuel economy figures as well as a comparison tool that allows you to check different vehicles’ annual fuel cost estimates.

For auto insurance quotes, reach out to your agent or an insurance company you’re interested in. You can easily get car insurance quotes from companies to get a sense of what you’ll pay. When calculating your monthly car payment and total expenses, try to keep your total costs to less than 20% of your monthly take-home pay.

#3 Calculate Your Car Loan Amount

Once you’ve calculated your affordable monthly payment, you can begin to determine how much you can borrow. The amount a lender will let you borrow depends on several factors, including:

How Much Can I Afford For a Car? (With Calculator) (6)
  • Your credit score: This will affect the annual percentage rate (APR) on the loan and how much the bank is willing to lend you.
  • Your loan term: This is how many months you’ll have to pay your auto loan off.
  • Whether you buy a used or new car: New car loans tend to have lower APRs than used cars.

#4 Set a Purchase Price

The total loan amount you calculated for your car may not be the price you pay. When shopping for a car, pay attention to details other than the sticker price. In most states, you’ll have to pay sales tax and fees whether you buy a new or used car.

Here’s a breakdown of how much you can expect to pay in fees or taxes:

  • Sales tax: Up to 11% and varies by state
  • Registration fees: Typically range from $50 to $300, although some states, like Georgia, charge as much as $2,465 on average
  • Documentation fees: Generally between $100 and $500, depending on your state

Making a down payment or trading your old car in can help you borrow less money when purchasing a vehicle.

Where Can You Find Affordable Car Financing?

There are several ways to finance a car purchase, including going through your bank, getting a loan from a dealership or using a third-party loan provider. We’ll explain each one in more detail below.

Bank or Credit Union

Traditional lenders like banks and credit unions generally offer lower rates or special deals for those who bank with them. If you have a good track record with your bank, it can provide you with a letter stating how much you are approved to borrow. You can then use the letter to buy a car or negotiate with other lenders to get a better deal.

Dealership

Most auto dealerships, especially those affiliated with manufacturers like Ford, Honda or Toyota, work with lenders that arrange car loans for qualified borrowers on-site. Some dealers also offer loans through national and regional banks that provide automotive financing.

When you sign on for a loan at a dealership, your monthly payments will be sent to the partner bank or finance company that backs your loan. Your vehicle’s title will be mailed to you once you’ve repaid the loan.

Online Auto Loan

An online auto loan offers a faster approval process than a standard auto loan and more flexible terms to fit your needs and help you get the vehicle you want. Buyers with bad credit who can’t get loans through traditional means may be able to find third-party auto lenders that are willing to loan them money.

The biggest drawback to using a third-party auto lender is the interest rate you’ll pay. Most third-party loan providers require higher returns on their money than traditional lenders like banks or dealerships.

Find How Much Car You Can Afford: 3 Financing Options

If you’re on a tight budget, explore all of your options before purchasing a car. Several choices are available, including leasing or buying a used or new car.

Leasing

A car lease allows you to essentially rent a car from a dealership for a certain length of time and mileage. It can be a good option since the monthly payments are lower than those for buying the car outright. However, keep in mind that you’ll have a mileage limit and the money you pay toward your car won’t bring any value to you.

Buying a Used Car

Purchasing a used car gives you more freedom than a car lease. Used cars tend to be priced significantly lower than new cars, making monthly payments more affordable. Additionally, car expenses such as insurance tend to be lower for used vehicles.

Buying a New Car

If you want to finance a new vehicle, do your research so you know which make and model you want. Knowing a car’s fair market value will help you negotiate the best deal possible at a dealership.

How Much Car Payment Can I Afford: The Bottom Line

While there are no set limits for how much car you can afford, there are many guidelines that financial experts suggest. You can calculate how much you can afford to pay manually through our steps or use an affordability calculator. Before you decide on a car loan provider, make sure to explore your options to find the best deal.

Our Recommendations for Car Financing

Shopping around with auto loan providers can help you get lower interest rates. Most banks, dealerships and third-party loan providers will give you free quotes. We recommend reaching out to Auto Approve for free quotes on auto loan rates.

Auto Approve: Top Choice for Refinancing

We named Auto Approve one of the best auto loan companies of 2022. It has a reputation for being a refinance auto loan specialist, and the company’s lease buyout option makes it a viable option for those looking to purchase a vehicle. Auto Approve offers rates as low as 2.25% APR for those with good credit scores.

Keep reading: Auto Approve review

RateGenius: Top Choice for Good Credit

RateGenius offers drivers with a minimum approval credit score of 640 the opportunity to refinance their auto loan on cars, trucks, and SUVs. It features a large loan amount range from $12,000 to $100,000, making it an effective option for those with good credit. RateGenius also offers rates as low as 3.09% APR for those looking to purchase a vehicle or refinance their auto loan.

Keep reading: RateGenius review

How Much Car Can I Afford: FAQ

Below are frequently asked questions related to how much car you can afford:

According to our research, you shouldn’t spend more than 10% to 15% of your net monthly income on car payments. Your total vehicle costs, including loan payments and insurance, should total no more than 20%. You can use a car loan calculator to calculate a monthly payment within your budget.

If your take-home pay is $60,000 per year, you should pay no more than $750 per month for a car, which totals 15% of your monthly take-home pay.

According to our experts, the best auto loan companies in the U.S. are myAutoloan, Consumers Credit Union, AutoPay, PenFed Credit Union and iLending. We rated each based on its reputation,availability, loan details, rates and customer experience.

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation (30% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
  • Availability (20% of total score): Companies that cover a variety of circ*mstances are more likely to meet borrowers’ needs.
  • Loan Details (15% of total score): We considered the types of loans, term lengths and loan amounts that are available from each lender to determine this score.
  • Rates (25% of total score): Auto loan providers with low APRs scored highest in this category. Available discounts were also taken into account.
  • Customer Experience (10% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data accurate at time of publication.

How Much Can I Afford For a Car? (With Calculator) (9)

Daniel RobinsonWriter

Daniel is a MarketWatch Guides team writer and has written for numerous automotive news sites and marketing firms across the U.S., U.K., and Australia, specializing in auto finance and car care topics. Daniel is a MarketWatch Guides team authority on auto insurance, loans, warranty options, auto services and more.

How Much Can I Afford For a Car? (With Calculator) (10)

Rashawn MitchnerManaging Editor

Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance and insurance topics.

How Much Can I Afford For a Car? (With Calculator) (2024)

FAQs

How Much Can I Afford For a Car? (With Calculator)? ›

20% down — be able to pay 20% or more of the total purchase price up front. 4-year loan — be able to pay off the balance in 48 months or fewer. 10% of your income — your total monthly auto costs (including insurance, gas, maintenance, and car payments) should be 10% or less of your monthly income.

What is the rule for how much car you can afford? ›

20% down — be able to pay 20% or more of the total purchase price up front. 4-year loan — be able to pay off the balance in 48 months or fewer. 10% of your income — your total monthly auto costs (including insurance, gas, maintenance, and car payments) should be 10% or less of your monthly income.

How much should I spend on a car if I make $400,000? ›

So, how much car can you afford? As a rule of thumb, never spend more than 35% of your gross annual income on a car. The following calculator allows you to see enter variables, including down payment, interest rate, and loan term to compare a monthly payment to what's affordable.

What car can I afford if I make $70,000 a year? ›

Using an average interest rate, and a car payment calculator, you can afford a $19,000-20,000 car on a $70k salary using the 20/4/20 rule of car buying.

How to afford a $50,000 car? ›

If you wanted to stick to this rule of thumb and buy a $50,000 car, you would need a monthly take-home income of at least $7,240 if you got a car loan at a below-average rate and stretched out your payoff time for a long time. Many people will find that purchasing such an expensive car really isn't affordable.

How much car can I afford on a $60000 salary? ›

How much should I spend on a car if I make $60,000? If your gross salary is $60,000, your take-home monthly pay is probably around $3,750, assuming about 25% of your pay goes toward taxes and other expenses. Based on the 10-15% calculation, you should spend no more than $562.50 on a monthly car payment.

How much should I spend on a car if I make $100,000? ›

Starting with the 1/10th guideline, created and pushed by Financial Samurai, this guideline states: buy a car in cash that costs less than 1/10th your gross annual pay. If you make $50,000 you should buy a car in cash worth $5000. If you make $100,000, the car you buy should be worth no more than $10,000.

How much car can I afford making $100000 a year? ›

How much car can I afford based on salary?
Annual salary (pre-tax)Estimated monthly car payment should not exceed
$25,000$208 per month
$50,000$416 per month
$75,000$625 per month
$100,000$833 per month
2 more rows
Oct 13, 2023

What car can I afford based on a salary calculator? ›

There's no perfect formula for how much you can afford, but our short answer is that your new-car payment should be no more than 15% of your monthly take-home pay. If you're leasing or buying used, it should be no more than 10%.

Is $400 a month too much for a car? ›

How much should you spend on a car? Whether you're taking out an auto loan or a personal loan to pay for your car, it's a good idea to limit your car payments to between 10% and 15% of your take-home pay. If you take home $4,000 per month, you'd want your car payment to be no more than $400 to $600.

Can I afford a 30k car making 60k a year? ›

rule of thumb for how much your car payments should be. You should aim to keep your car payments around. 10% of your gross monthly income or below. So if you make 60 K a year, you should spend no more than $500 on your car payments.

What is the 20 4 20 rule? ›

First and foremost, the 20/4/10 rule is not a law. It's more like general guidelines and a way to plan for vehicle expenses. Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses.

What car can you afford making $50,000 a year? ›

Start With Your Gross Income

To get an idea of how much car you can afford, a good rule of thumb is to pay no more than 35% of your annual pre-tax income. So, if you make $50,000 before taxes per year, your car purchase price should not exceed $17,500.

How do I know if I can afford a car? ›

Financial experts answer this question by using a simple rule of thumb: Car buyers should spend no more than 10% of their take-home pay on a car loan payment and no more than 20% for total car expenses, which also includes things like gas, insurance, repairs and maintenance.

How long should a car loan be? ›

Even though the majority of car buyers are going with long-term car loans, is an auto loan of 72 months or more a good idea for you? NerdWallet recommends financing new cars for no more than 60 months and used cars for no more than 36 months.

What credit score is needed for a 50k car loan? ›

To buy a $50,000 car and get favorable auto loan options, it's best to have a credit score in the prime or super prime categories. Prime borrowers are those with a credit score within the 661-780 range, while super-prime borrowers fall within the 781-850 range.

What is the 20 3 8 rule for cars? ›

The 20/3/8 car buying rule says you should put 20% down, pay off your car loan in three years (36 months), and spend no more than 8% of your pretax income on car payments.

What is the 50 30 20 rule for car payments? ›

Balance Your Budget

50% for needs like housing, food, and transportation. In this case, the monthly car payment and other related auto expenses fit into this category. 30% for wants like entertainment, travel, and other nonessential items. 20% for savings, paying off credit cards, and meeting long-term financial goals.

What is the 24 10 rule for cars? ›

Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses. These expenses include any money you put towards your new vehicle, including gas, insurance, and loan payments.

Top Articles
Latest Posts
Article information

Author: Twana Towne Ret

Last Updated:

Views: 5313

Rating: 4.3 / 5 (44 voted)

Reviews: 91% of readers found this page helpful

Author information

Name: Twana Towne Ret

Birthday: 1994-03-19

Address: Apt. 990 97439 Corwin Motorway, Port Eliseoburgh, NM 99144-2618

Phone: +5958753152963

Job: National Specialist

Hobby: Kayaking, Photography, Skydiving, Embroidery, Leather crafting, Orienteering, Cooking

Introduction: My name is Twana Towne Ret, I am a famous, talented, joyous, perfect, powerful, inquisitive, lovely person who loves writing and wants to share my knowledge and understanding with you.