Car Affordability Calculator
Find out the maximum car price you can afford based on the 15% of income guideline.
Read the GuideBefore you calculate
The payment ceiling uses your selected share of income. Insurance, fuel and maintenance are added to ownership cost; sales tax, registration, down payments and trade-ins are not modeled.
The 15% Rule of Car Affordability
Financial experts generally recommend keeping your total car payment at or below 15–20% of your gross monthly income and total transportation costs (payment + insurance + fuel + maintenance) below 20–25%. The maximum car price is derived by solving the loan payment formula in reverse — given a target payment, rate, and term, what principal does that support?
Max Payment = Monthly Income × (Payment % / 100) | Max Car Price = Payment × [(1 − (1 + r)^−n) / r] | where r = monthly rate, n = monthsExample Scenarios
$60,000 Salary, 6% Rate, 60 Months
At $5,000/month gross income with a 15% payment limit, your max monthly payment is $750. At 6% over 60 months, that supports a loan of about $38,900. After adding insurance, fuel, and maintenance, total monthly transportation cost could be around $1,200 — ensure that fits your budget.
Longer Terms Lower Payments but Increase Total Cost
Extending from 48 to 72 months can increase the affordable car price by $5,000–$8,000, but you pay significantly more in total interest and risk being 'underwater' on the loan. Try to stay at 60 months or less for new cars.
Methodology & Assumptions
Max car price is calculated by solving P = PMT × (1 − (1 + r)^−n) / r for P, where PMT = monthlyIncome × (maxCarPaymentPercent / 100). Total cost of ownership includes all monthly ownership costs multiplied by term months.
Sources & calculation notes
Maintained by MoneyCalc. Results are estimates based on the inputs and assumptions shown, not personalized financial advice or a lender quote. Default rates are examples unless a specific tax year or official table is identified.
References explain the underlying concepts or rules. They do not endorse or independently certify this implementation.
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