How Much Car Can I Afford?

Free · no sign-up · reviewed September 2026

Before you fall in love with a car on the lot, it helps to know the number you can actually afford. This calculator works backward from your take-home pay to a sensible car price and monthly payment, so you shop with a ceiling in mind.

Set your monthly take-home pay and down payment, and it shows the price range that keeps your car costs from crowding out the rest of your life. Dealers will happily sell you more, so bring your own number.

Drag to adjust

Your numbers

Monthly take-home pay

Your pay after taxes

Share of pay for the car

The 20/4/10 rule caps all car costs near 10%

Insurance, gas & upkeep

Comes out of the 10% before the loan does. IRS allowance: $248–$423/mo

Down payment + trade-in

Interest rate (APR)

Loan term

Car you can afford

$9,128

About $124/mo payment with $4,000 down

💡 On $4,200 of take-home pay, 10% is $420 a month for everything a car costs. Insurance, gas and upkeep take $296 of that, leaving $124 for the loan — which over 48 months at 7.5%, with $4,000 down, is a car around $9,128. The IRS allows a taxpayer $703 a month for a car payment alone, so if this looks tight, that is the rule being strict rather than you being unusual.

$9,128

Target price

out the door

$124

Max payment

loan only

$5,128

You'd finance

over 48 mo

Down payment / trade-in$4,000
Financed with a loan$5,128

Total monthly car budget: $420
Insurance, gas & upkeep: $296
For the loan payment: $124
Amount you can finance: $5,128
Car price you can afford: $9,128
IRS allowance for a car payment: $703/mo

Car Affordability Calculator · Far Better Off

https://farbetteroff.com/calculators/car-affordability-calculator

Open that link to get this calculator back with these exact numbers. Estimates for education only — Far Better Off is not a lender or a financial advisor, and these results are not financial advice.

The 2-minute guide

The 20/4/10 rule

A simple guideline that keeps people out of car trouble: put at least 20% down, finance for no more than 4 years, and keep all your car costs — payment, insurance, gas, maintenance — under about 10% of your take-home pay. The last word is the one that gets dropped: the 10% is not the payment, it is everything, so this calculator takes insurance, gas and upkeep out of the allowance before working out what is left for a loan. Nobody official sets this rule.

What running a car actually costs

The insurance, gas and upkeep field starts at $296 a month, which is the middle of what the IRS itself publishes. Its Collection Financial Standards — the amounts it treats as necessary when working out what someone behind on their taxes can afford to pay — allow $703 a month for a car payment plus operating costs of $248 (Anchorage) to $423 (Miami) covering maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls. Those are ceilings on what a taxpayer may claim rather than advice, but they are a federal body's own answer to what a car costs to run, and they are far above the token reserve most affordability calculators use. Put your own number in if you know it.

Longer loans hide a bad deal

Stretching to 72 or 84 months makes almost any car's monthly payment look affordable, but you pay far more interest and stay 'underwater' (owing more than the car is worth) for years. If a 4-year loan's payment feels too high, that's usually a sign to look at a cheaper car, not a longer loan.

Payment isn't the whole cost

The sticker and the payment are just the start. Insurance, fuel, registration and repairs can easily add a few hundred dollars a month. That's why the rule of thumb is based on total car costs, not just the loan. Budget for the whole picture so the car doesn't quietly break your finances.

Frequently asked questions

How much car can I afford on my salary?

A common guideline is to keep all your car costs (payment, insurance, gas and upkeep) under about 10% of your take-home pay, with at least 20% down and a loan of 4 years or less. This calculator turns your pay into a specific price and payment using that approach.

Does the 10% rule include insurance and gas?

Yes — and that is the part most people miss. The 20/4/10 rule caps the loan payment, insurance, fuel, maintenance and registration at 10% of take-home pay, not the loan payment alone. Running costs are real money: the IRS's own transportation standards, effective 2026-06-29, allow $248 a month in Anchorage to $423 in Miami for maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls, on top of a $703 allowance for the payment itself. So on $4,200 of monthly take-home, 10% is $420 for everything, and a typical $296 of insurance, gas and upkeep leaves about $124 a month for the loan — not $420.

What is the 20/4/10 rule for buying a car?

It's a simple affordability rule: put 20% down, finance for no more than 4 years, and keep total monthly car costs at or below 10% of your take-home pay. Following it keeps you from overspending and helps you build equity in the car instead of staying underwater.

Should I buy a new or used car?

Used cars are usually the better financial move because new cars lose a big chunk of value in the first few years. A lightly used car lets someone else absorb that first hit of depreciation. If you do buy new, plan to keep it long enough to make the higher cost worthwhile.

How much should I put down on a car?

Aim for at least 20% down on a new car (less depreciation risk on used). A bigger down payment lowers your loan, your interest and your monthly payment, and it keeps you from going underwater as the car loses value.

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