How Much Car Can You Really Afford?
Buying a car is one of the largest financial decisions you'll make. Our Car Affordability Calculator helps you determine a realistic budget based on your monthly income, expenses, and down payment. Whether you follow the conservative 20/4/10 rule or have a specific monthly payment in mind, this tool works backward to find the total car price that fits your financial life.
The Golden Rule: 20/4/10
Financial experts widely recommend the '20/4/10 rule' to ensure your car doesn't become a financial burden. Here is what it means:
Salary to Car Price Ratio
A common question is 'How much car can I afford if I make $50k, $75k, or $100k?' based on the 10-15% monthly payment rule:
| Annual Salary | Monthly Take-Home (Est.) | Safe Monthly Payment (10%) | Approx. Car Price |
|---|---|---|---|
| $40,000 | $2,800 | $280 | $12,000 - $15,000 |
| $60,000 | $4,000 | $400 | $18,000 - $22,000 |
| $80,000 | $5,200 | $520 | $25,000 - $30,000 |
| $100,000 | $6,500 | $650 | $32,000 - $38,000 |
| $150,000 | $9,200 | $920 | $45,000 - $55,000 |
Hidden Costs of Car Ownership
Ideally, your affordability calculation should leave room for running costs. The sticker price is just the beginning. Use our car payment calculator to see how interest impacts your monthly cash flow, but don't forget:
How Credit Score Affects Affordability
Your credit score determines your interest rate (APR). A lower score means a higher rate, which reduces the amount of car you can afford for the same monthly payment.
| Credit Score | Est. New Car APR (2026) | Est. Used Car APR (2026) | Buying Power Impact |
|---|---|---|---|
| Super Prime (781-850) | 5.5% | 7.0% | Highest |
| Prime (661-780) | 6.8% | 9.0% | High |
| Non-Prime (601-660) | 9.5% | 13.5% | Moderate |
| Subprime (501-600) | 12.5% | 18.0% | Low |
| Deep Subprime (<500) | 15.0%+ | 21.0%+ | Lowest (-20% budget) |
Car Affordability FAQ
Q:What is the 20/4/10 rule for buying a car?
The 20/4/10 rule is a conservative financial guideline: Put down at least 20%, finance for no more than 4 years (48 months), and keep total monthly car costs (payment + insurance + gas) under 10% of your gross monthly income. This prevents you from becoming 'car poor'.
Q:How much should I spend on a car based on my salary?
Most financial experts recommend your car payment should not exceed 10-15% of your take-home pay. For example, if you take home $4,000/month, your car payment should be between $400 and $600. If you have no other debts, you might stretch to 20%, but this impacts savings.
Q:Does this calculator include sales tax and fees?
Our calculator has an option to input your local sales tax rate (typically 6-10%). It automatically deducts this estimated tax from your total budget to show you the 'Sticker Price' you can afford. Remember to budget extra for registration and dealer doc fees.
Q:Can I afford a car with a 72 or 84-month loan?
While longer loans lower your monthly payment and technically let you buy a more expensive car, they are dangerous. You pay significantly more interest and will likely be 'underwater' (owe more than the car is worth) for years. We recommend sticking to 60 months or less whenever possible.
Q:Should I use gross or net income for car affordability?
It is safer to use your Net Income (take-home pay) because that is the actual cash you have available. Gross income includes money that goes to taxes, which you can't use to pay for a car. Our calculator allows you to input your monthly available budget directly for maximum accuracy.
Q:How does my trade-in affect what I can afford?
Your trade-in acts like a down payment. If you have a trade-in worth $10,000 and you owe $0 on it, that is $10,000 of immediate buying power added to your budget. If you still owe money on the trade-in, only the positive equity directly helps.