The dealership will tell you what you qualify for. This calculator tells you what you can actually afford without stressing your monthly budget. There's a big difference — and it can save you years of financial strain.
The 15% Rule for Car Buying
Financial experts generally recommend spending no more than 15% of your monthly take-home pay on total car expenses — that includes your loan payment, insurance, gas, and maintenance. If you take home $4,000/month, your all-in car costs should stay under $600/month.
A stricter version caps the vehicle purchase price at no more than 20% of your gross annual income. At $60,000/year, that means a car priced at $12,000 or less.
How This Calculator Works
Enter your monthly take-home pay (after taxes), any existing monthly debt payments, your available down payment, your desired loan term, and an estimated APR. The calculator applies the 15% rule and reverse-engineers a maximum vehicle price that keeps your payment in a healthy range.
Don't Forget the True Cost of Car Ownership
The sticker price is just the beginning. Factor in:
- Insurance: $100–$250/month
- Gas: $80–$200/month
- Maintenance: ~$100/month for a newer vehicle
- Registration and taxes: $100–$500/year
Frequently Asked Questions
What if I need a car that costs more than I can afford?
Consider a certified pre-owned vehicle, a longer savings period, or a less expensive make/model.
Is leasing more affordable than buying?
Leasing has lower monthly payments but you build no equity. For most people who keep vehicles long-term, buying is more economical.
Ready to calculate your exact payments?
Once you know your maximum budget, model your loan breakdown in details using our Auto Loan Calculator.
Go to Auto Loan Calculator →