How much car can you afford?

To determine how much car you can afford, financial experts recommend keeping your total monthly car payment at 10% or less of your gross monthly income, spending no more than 15% to 20% of your take-home pay on car expenses, and ensuring that total vehicle costs, including loan payments and insurance, don’t exceed 20% of your monthly income.

How much should I pay for a used car?

We advise purchasing a used car and keeping your payments under $150/month if you finance a vehicle. That leaves $146.20/month for car insurance, gas, and car maintenance and repairs. Using our Car Affordability Calculator, you can plug in the $150 as a preferred monthly payment and then plug in variables for financing the vehicle.

How does a car affordability calculator work?

The affordability calculator uses the same variables but in reverse order. You enter your desired monthly payment (the amount you can afford) and fill in the known variables, like tax rate, license and document fees, interest rate, and loan term. The calculator computes the price of the car you can afford within those parameters.