Start from your budget, not the sticker price. Enter your income and the share you’re comfortable spending on a car payment, and the calculator works backward to the price you can afford.
How it works
The calculator turns your payment limit into a loan amount, then adds your down payment and trade-in and removes sales tax and fees.
Loan = payment × (1 − (1 + r)−n) ÷ r
Car price = (loan − fees + down payment + trade-in) ÷ (1 + tax rate)
Worked example: $75,000 income
10% of $6,250 a month is a $625 payment. Over 60 months at 6.35% APR that supports a $32,058 loan. Add $5,000 down and take off $800 in fees and 6% tax, and you can afford a car of about $34,200.
Average car costs in 2026
Experian’s second-quarter 2026 report put the average new-car payment at $765 a month with an average rate of 6.35%. Used-car loans averaged 11.19%. Your credit score changes the rate the most, which changes what you can afford: the same $625 payment buys several thousand dollars less car at a used-car rate.
| Rule of thumb | What it says |
|---|---|
| 20/4/10 | 20% down, loan of 4 years or less, all car costs under 10% of gross income |
| 10–15% rule | Car payment alone under 10–15% of gross income |
These are guidelines, not laws. Insurance, fuel and repairs come on top of the payment.
Frequently asked questions
Why does a longer loan let me afford more car?
The same payment is spread over more months, so you can borrow more. But you pay more interest and may owe more than the car is worth for years.
Should I count my spouse’s income?
Use the income that will actually pay the loan. If both incomes cover household bills, use both.
What else should I budget for?
Insurance, fuel, maintenance, registration and parking. Our gas cost calculator helps with fuel.
Source: Experian, State of the Automotive Finance Market, Q2 2026. Estimates only; your lender’s figures are final.
