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Borrow & repay

How Much Car Can I Afford?

How much car can I afford on my income?

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$
After tax. The paycheck calculator can work it out.
% of pay
The CFPB suggests 10–15% for all transportation.
$
$
$
%
Loan term
Down payment, trade-in and tax
$
$
%
Charged here on the price minus your trade-in.

You can afford a car up to

$22,859

With a $430 monthly payment over 60 months at 7.5% APR.

Monthly car budget
$750
Left for the loan payment
$430
Loan amount
$21,459
Sales tax
$1,600
Total interest
$4,341

Car Affordability Calculator by Dollars World ·Open the full version

A longer loan buys more car, at a cost

Same monthly payment and APR, different terms.

TermCar priceInterest
36 months——
48 months——
60 months——
72 months——
84 months——

How it works

The CFPB suggests keeping all your transportation costs, not just the loan payment, to about 10–15% of your take-home pay. So the calculator starts from that total, takes out insurance, fuel and maintenance, and treats what's left as your loan payment.

Loan = payment × (1 − (1 + r)^−n) ÷ r, where r = APR ÷ 12

Car price + sales tax = loan + down payment + trade-in

Worked example

You take home $5,000 a month and set aside 15%, or $750, for your car. Insurance, fuel and maintenance take $320, which leaves $430 for the loan payment.

At 7.5% APR over 60 months that supports a $21,459 loan. With $3,000 down and 7% sales tax, you can afford a car up to about $22,859, and you'd pay $4,341 in interest.

Stretch the loan to 72 months and the price rises to $26,046, but interest grows to $6,090, and you'll owe more than the car is worth for longer.

Things to know

  • Shop the loan before the car. Get preapproved by a bank or credit union so you know your rate, then compare it with the dealer's offer.
  • Negotiate the price, not the payment. A low monthly payment can hide a higher price or a longer loan. Compare total cost.
  • Count the other costs. Registration, fees and any add-ons also come due. Check them on the buyer's order before you sign.
  • Sales tax rules vary. Many states tax the price minus your trade-in; some tax the full price. Check yours.

Questions people ask

What is the 20/4/10 rule?

A popular rule of thumb: put 20% down, borrow for no more than 4 years, and keep car costs under 10% of income. It's stricter than the CFPB's guideline, and a sound target if you can manage it.

What will my car payment be?

If you already know the price, the loan calculator gives the monthly payment and total interest for any term.

Sources

Reviewed September 26, 2026 by The Dollars World team. How we build and check our calculators · Our data and formulas. This is general information, not financial advice.

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