Car Affordability Calculator (by Income)
Turn your income, debts, down payment and trade-in into the car price you can afford, with sales tax and fees, a debt-to-income check, running costs and the 20/4/10 rule.
How it works
Max payment = min(share% × monthly income, DTI limit × gross monthly income − existing debts) · Max loan = payment × (1 − (1 + i)^−n) ÷ i · Price = (max loan + down payment + trade-in equity − fees) ÷ (1 + sales tax) (i = APR ÷ 12, n = term in months)
Start from cash flow, not the sticker price. Two limits apply to the monthly payment. A budgeting rule keeps the car payment near a share of income, often 10%–15%; you can apply it to gross income or to take-home pay. Lenders also look at your total debt-to-income ratio, so the car payment plus your existing debts should stay within about 36% of gross income. The tighter limit sets the payment, and you can optionally add a third limit for all car costs together (payment, insurance, fuel and maintenance), often about 20%. The payment is converted into a loan with the standard annuity formula. The down payment and any trade-in equity are added, title and dealer fees are subtracted, and the result is divided by one plus the sales-tax rate to give the sticker price you can afford. The calculator also shows the out-the-door cost, the interest you would pay, how the price changes with the loan term or the income share, and what the stricter 20/4/10 rule would allow.
Worked example
On $60,000 income ($5,000 a month gross), 15% for the payment is $750. The debt check allows 36% × $5,000 − $300 = $1,500, so the $750 payment sets the limit. At 7% APR over 60 months, $750 a month repays about $37,876. Adding the $3,000 down payment and subtracting $500 of fees gives $40,376 to spend, which covers a car of about $38,090 plus 6% sales tax ($2,285). Interest over the loan is about $7,124. With $375 a month of insurance, fuel and maintenance, car costs come to $1,125, or 22.5% of gross income. The stricter 20/4/10 rule leaves only $125 a month for a payment after running costs, which points to a car of about $5,490.
Frequently asked questions
What percentage of income should go to a car payment?
Common guides put the payment alone at 10%–15% of income, and all car costs (payment, insurance, fuel, maintenance) under about 20%. You can apply the share to gross income or to take-home pay; take-home is the more cautious choice.
What is the 20/4/10 rule?
Put at least 20% down, finance for no more than 4 years, and keep total car costs within 10% of gross income. It is strict: it leaves room for saving and other goals. The calculator shows the price it would allow next to your own settings.
Does a bigger down payment let me afford more car?
Yes — the down payment adds directly to the price on top of what the loan covers, and it also reduces the amount financed, so you pay less interest. It does not change the monthly payment budget, only how much car that budget reaches.
Why do my existing debts lower the number?
Lenders qualify you on total debt-to-income, so rent, credit cards and other loans compete with the car payment for the same slice of income. When the car payment plus your other debts would pass the debt limit, the debt limit sets the payment instead of the income share.
Why does a longer loan let me buy a pricier car?
The same payment repays a bigger loan over more months. The term table shows how much more car each term buys and how much more interest it costs. Terms over 72 months often leave you owing more than the car is worth.
Are sales tax and fees included?
Yes. The affordable price is the sticker price before tax. Sales tax and fees are added on top to give the out-the-door cost. Set the tax to 0 if prices where you live already include tax.
Related calculators
Educational estimate only — real costs vary by lender, insurer, location and driving habits. Not financial advice.