Vehicle Affordability Calculator: How Much Car Can I Afford?

5 steps to calculating your budget

Next, we'll walk you through exactly how to determine what type of car you can afford.

Step 1: Lease or buy?

Perhaps you’ve never considered your options when it comes to leasing or buying your next set of wheels. Research the pros and cons for each option, to see which works best for you. 

Step 2: Consult your budget

A good starting point is your budget. Experts say your total car expenses, including monthly payments, car insurance, gas and maintenance, should be about 20 percent of your take-home monthly pay. (For more on this, read more about the 50-30-20 budget rule.)

Let’s say your monthly paycheck is $4,000; in that case a safe estimate for car expenses is $800 per month. (Remember, that $800 is for all car-related expenses, not just your car payment. It includes things like fuel and maintenance.)

Step 3: Plug and chug

Take your monthly payment estimate from step 2, and plug it into the calculator on this page. It’ll help you determine how much car you can afford.

Step 4: Test drive your car payments

If you can hold off from buying a car for a few months, it’s a good idea to test out your monthly payments.

For example, if your car payment will be $800 per month, take that amount, and put it into savings instead. If you can make timely payments on your other bills, and still put food on the table, then it’s safe to say that is an appropriate monthly payment for you to handle. Plus, that’s more money you have in the bank to go towards a down payment.

Step 5: Buy a car you can afford

The best part: Walk into the dealership, sign the papers and drive away. Enjoy a new car that fits your style, and your budget.

Additional things to consider

• Annual interest rates: Interest is rolled into your monthly payment, and if rates happen to be high when you're buying, they'll make up a good chunk of what you pay each month. A high interest rate may put the car you want out of reach.
• Loan terms: A loan term is how much time you agree to pay the loan back to the bank. They're measured in months, and come in two varieties: long and short. Long loan terms result in a lower monthly payment because you're taking longer to pay it off. With a short loan term, you'll pay the car off faster, but you'll also pay more each month.
  • Here's the tricky part: the loan term may not be up to you. You'll only be eligible for long terms if your credit is good, so check your credit before buying.
• Car maintenance: Remember to factor in the cost of maintenance when planning for a monthly payment. A newer vehicle will likely require less of both, while a pre-owned vehicle might require more. 

Final thoughts

Buying a car isn't easy, but with the right planning, it's not as bad as it sounds. If it's time to buy a new car, talk to a rep today—they can help you compare how much car you need vs. what you can afford and answer any questions.

Updated 1-15-25