How much car can I afford based on my salary?
A $60,000 salary supports a car near $11,056 and a $100,000 salary one near $26,863, if all your car costs stay within 10% of gross income. If the 10% covers only the payment, the prices are far higher, as the last column shows. Decide which one you mean before you trust either number.
| Salary | 10% a month | Left for a payment | Car price | Car price if 10% is the payment alone |
|---|---|---|---|---|
| $60,000 | $500 | $150 | $11,056 | $27,653 |
| $70,000 | $583 | $233 | $15,008 | $31,605 |
| $80,000 | $667 | $317 | $18,959 | $35,556 |
| $100,000 | $833 | $483 | $26,863 | $43,460 |
| $120,000 | $1,000 | $650 | $34,766 | $51,363 |
| $150,000 | $1,250 | $900 | $46,621 | $63,218 |
| $200,000 | $1,667 | $1,317 | $66,379 | $82,976 |
This uses your income before tax and ignores your other debts and savings. A budget with student loans or childcare has less room than one without, so test the result in the budget calculator.
How much car can I afford for $300, $400, or $500 a month?
A $400 payment buys a car priced near $22,911 over 60 months, with these inputs. Stretching the loan raises the price, but it also raises your interest, and that's only worth it if you truly need the room.
| Monthly payment | 48 months | 60 months | 72 months |
|---|---|---|---|
| $200 | $11,785 | $13,427 | $14,958 |
| $250 | $13,746 | $15,798 | $17,712 |
| $300 | $15,707 | $18,169 | $20,466 |
| $350 | $17,667 | $20,540 | $23,219 |
| $400 | $19,628 | $22,911 | $25,973 |
| $450 | $21,588 | $25,282 | $28,727 |
| $500 | $23,549 | $27,653 | $31,480 |
| $550 | $25,509 | $30,024 | $34,234 |
| $600 | $27,470 | $32,395 | $36,988 |
| $1,000 | $43,155 | $51,363 | $59,018 |
How to calculate how much car you can afford
Work backward in three steps: from the payment to the loan, from the loan to what you can spend in total, and from that total to the car's price. Sales tax and fees come out along the way, which is why the car costs less than the loan and down payment added together.
Loan = payment × (1 − (1 + r)^−n) ÷ rPrice = (loan + down payment + trade-in equity − fees) ÷ (1 + tax rate)For $400 a month at 7% over 60 months, r is 0.005833 and the loan is $20,201. Add $5,000 down and subtract $800 in fees to get $24,401. Divide by 1.065 for 6.5% tax, and the price is about $22,911. If your state taxes the price after a trade-in, the calculator handles that too, and a switch covers states that don't.
What is the 20/4/10 rule for buying a car?
It's a rule of thumb: put at least 20% down, finance for 4 years or less, and keep car costs to 10% of gross income or less. It isn't a rule from a lender or regulator, and it's useful as a check, not as a limit.
On $75,000, it points to about $14,726 with $5,000 down, a loan of $11,483 over 48 months, and $275 a month. That's $2,258 less than the 60-month plan, and the longer loan is the only difference. If you had just $1,500 down, 20% caps the price at $7,500, because that money must be a fifth of the price.
The CFPB's auto loan guide makes a similar point: think about the total cost of the loan, not only the monthly payment. It adds that some financial advisers recommend keeping a car loan to five years or less, because the longer the loan, the more likely you'll owe more than the car is worth.
What should my total car budget include?
Count the whole monthly bill, not only the payment. The CFPB's auto loan guide lists state taxes, title and dealer fees at purchase, and then insurance, gas, registration, maintenance, and repairs for as long as you own the car. In this example, the $275 payment is less than half of the $625 monthly total.
| Monthly cost | Amount | Where to get a real number |
|---|---|---|
| Loan payment | $275 | A written loan quote |
| Insurance | $150 | A quote for the exact car |
| Fuel or charging | $120 | Your miles ÷ its mpg × your price per gallon |
| Maintenance and repairs | $80 | The owner's manual schedule, plus a repair cushion |
| Total | $625 | 10% of $6,250 gross a month |
Here's what's easy to miss: every dollar of running cost comes out of your price. If insurance on the car you want is $100 a month higher, your price falls from $16,984 to $12,242. Get an insurance quote before you fall for a car, not after. You can compare the fuel costs of models at fueleconomy.gov.
The mistake that makes a car look affordable
A longer loan makes more car seem affordable at the same payment. At $275 a month, 48 months buys a $14,726 car and 84 months buys a $21,052 car, at the same rate. But interest goes from $1,716 to $4,879, and the CFPB warns a longer loan puts you at risk of negative equity for longer. In real life, the 84-month rate may also be higher.
A better rate is the cheaper way to get more car. Two points off, at 5%, lifts this 60-month budget from $16,984 to $17,626 without adding any months. Shop for the loan before the car. The CFPB suggests negotiating the total cost, not only the monthly payment.
This tool can't see your credit, your other debts, or what a lender would approve, and approval doesn't mean a payment fits your budget. If your budget is tight, a nonprofit credit counselor can review the whole thing with you. Once you've picked a price, take it to the auto loan calculator, and if you're still deciding how to pay, try the lease vs. buy calculator.
Common questions
How much car can I afford with a $100,000 salary?
About $26,863 if all car costs stay within 10% of gross income, using this page's example inputs. If 10% covers only the payment, it's about $43,460. Your down payment, rate, and running costs will move both figures.
How much car can I afford for $500 a month?
About $27,653 over 60 months with $5,000 down at 7%, 6.5% tax, and $800 in fees. Over 48 months it's about $23,549, and over 72 months about $31,480.
Does the price include sales tax?
The headline price is the price before tax. The calculator takes tax and fees out of your budget first, so you won't come up short at the dealer if your inputs are right.
Should the 10% include insurance and gas?
This calculator counts them by default, because they're real costs of having the car. You can turn that off in the advanced options to apply the limit to the payment alone, which allows a pricier car and a tighter budget.
What rate should I use?
A rate from a real quote. This site doesn't publish typical rates, because yours depends on your credit, the lender, and the car. The 7% here is only an example, and the "Rate 1% lower" what-if shows how much a rate is worth.
Sources
- Take control of your auto loan · Consumer Financial Protection Bureau
- Financing or leasing a car · Federal Trade Commission
- Fuel economy information · U.S. Department of Energy and Environmental Protection Agency