Car Affordability Calculator

On $5,000 a month of take-home pay, a $40,000 car financed for 72 months takes 23.0% of it, above the 20% line

"Car poor" describes someone whose car eats so much of their paycheck that saving, rent and everything else get squeezed. There is no official cutoff, but the common rules of thumb agree on the order of magnitude. NerdWallet suggests keeping the car payment to no more than 10% of monthly take-home pay and all car costs, including gas, insurance and maintenance, to 15% to 20%. The older 20/4/10 rule, which Edmunds now calls outdated, asked for 20% down, a four-year loan and a total car budget of 10% of take-home pay. This calculator uses 20% of take-home pay as its line for total car costs.

In the example, $36,000 financed at 7.2% APR for 72 months costs $617 a month. Add running costs of $532, which is $2,300 of insurance and $300 of registration fees spread over 12 months plus $145 of gas, $120 of maintenance and $50 of parking and tolls, and the car takes $1,149 a month, or 23.0% of $5,000. That is $149 a month over the $1,000 line, so the verdict is "Car-poor risk." Keeping the same $4,000 down payment, APR, term and running costs, the car price that fits this income is about $31,200. Enter your own numbers above and the gauge, the take-home pay bar, the other rule-of-thumb checks and the loan term table all update together.

Why run the numbers, and when it helps

• Before you visit a dealer: the conversation at the dealership often starts with the monthly payment you want, and a longer term can make almost any car fit that number. The average new vehicle sold for $50,089 in August 2026 (Kelley Blue Book), and the average compact SUV for $37,722. Knowing the price that fits your income first gives you a firm ceiling to negotiate against.
• When the offer is 72 or 84 months: according to Edmunds, 84-month loans reached 21.5% of new-car financing in the second quarter of 2025, nearly triple their 7.3% share in 2015, while 72 months remained the most common term. In the example, stretching from 72 to 84 months lowers the share only to 21.6% and adds $1,524 of interest. The term table shows both effects side by side.
• When you compare a lease with buying: choose "Enter monthly payment" and type the lease payment from the quote. Then add the insurance, registration and other costs you will still pay yourself, so the lease and the loan are judged by the same share of take-home pay.
• When you trade in a car you still owe money on: Edmunds reports that the average negative equity carried into a new-car loan was $7,064 in October 2025. If the dealer rolls your old balance into the new loan, add it to the car price field so the payment reflects what you will actually borrow.
• When your income or debts change: a new job, parental leave, a student loan coming out of deferment or a new mortgage can move the same car from Manageable to Car-poor risk. Try the expected income and debts before the change happens.

How the calculation works

1. Monthly loan payment (standard amortizing loan) = amount financed × monthly rate ÷ (1 − (1 + monthly rate)^−months). The amount financed is the car price minus the down payment, and the monthly rate is the APR ÷ 12. In the example, $36,000 × 0.6% ÷ (1 − 1.006⁻⁷²) = $617. For a lease, use the payment on the quote instead.
2. Monthly running costs = insurance ÷ 12 + registration and vehicle fees ÷ 12 + gas or charging + maintenance and tires + parking and tolls. Insurance and registration are billed once or twice a year, so dividing them by 12 shows what you need to set aside each month. In the example, $192 + $25 + $145 + $120 + $50 = $532.
3. Car cost share = (loan payment + running costs) ÷ monthly take-home pay, rounded to one decimal place before the verdict is decided. In the example, $1,149 ÷ $5,000 = 23.0%.
4. Left over = take-home pay − car costs − other debt payments. If this is negative, the verdict is "Shortfall" no matter what the share is.
5. Car price that fits this income = down payment + (the smaller of take-home pay × 20% and take-home pay − other debt payments, minus running costs) × (1 − (1 + monthly rate)^−months) ÷ monthly rate. It works backward from the money left for a loan payment under the line to the amount you could borrow at the same APR and term. In the example, $4,000 + $468 × 58.325 = $31,296, which is rounded down to the nearest $100, so it shows as $31,200. If running costs alone already use up the line, there is no room for a payment and no price is shown.

Verdicts and where the lines come from

The "Other rules of thumb" list under the result does not change the verdict. It shows whether the loan payment alone stays within 10% of take-home pay (NerdWallet), whether the down payment is at least 20% and the term no longer than 48 months (the down payment and term parts of the 20/4/10 rule), and whether any money is left after the car and your other debts. Edmunds points out that 48-month loans made up only 5.6% of loans in the second quarter of 2025, so most buyers miss the term check today. Treat those two checks as a description of a cautious purchase, not as a pass or fail grade.

How the share changes with the car price

Take-home pay of $5,000 a month, a down payment of 20% of the price, 7.2% APR for 72 months and running costs of $532 a month (the same as the example). Only the car price changes.

Even the $20,000 car does not reach "Comfortable" because running costs alone take $532, or 10.6% of take-home pay. With these costs, getting under 10% means cutting insurance, gas or parking before looking at a cheaper car. A 20% down payment on a $40,000 car also lowers the payment from $617 to $549 compared with the $4,000 down payment in the main example.

Car price that fits each take-home pay

This is the highest car price that keeps car costs within 20% of take-home pay, with 20% down, 7.2% APR and running costs fixed at $532 a month whatever the income. Prices are rounded down to the nearest $100. The last column applies the strict 20/4/10 version: 20% down, 48 months and a total car budget of 10% of take-home pay. A dash means running costs alone use up that budget.

At lower incomes, running costs take most of the 20% budget, so the price you can finance falls quickly: at $3,000 a month, only $68 is left for a payment. At higher incomes, the monthly test lets in expensive cars, but a longer loan does much of that work. Under the strict 20/4/10 version, $532 of running costs is more than 10% of $5,000, so no loan payment fits at all, and even $10,000 a month allows only $24,300. If your insurance or commute costs differ from the example, enter them above; the "car price that fits" row recalculates with your own figures.

What changes with the loan term

The example loan ($36,000 at 7.2% APR) with only the term changed.

Going from 36 to 84 months cuts the payment from $1,115 to $547 but raises total interest from $4,140 to $9,948, about 2.4 times as much, and the share still stays above 20%. Rates depend heavily on your credit score and the lender. The Federal Reserve's G.19 release puts the average at commercial banks in August 2026 at 7.54% for 60-month and 7.17% for 72-month new-car loans, and auto finance companies averaged 6.3% on new-car loans in June 2026, with a 67-month term and $41,705 financed. If you get a preapproval from a bank or credit union, enter that APR and compare it with the dealer's offer.

Running costs people leave out

• Sales tax, title and dealer fees: these are paid once at purchase, so they belong in the car price, not in running costs. Ask for the out-the-door price in writing. If you finance them, they also raise your loan amount.
• Insurance: AAA's 2026 Your Driving Costs study puts full coverage at $2,098 a year on average, from $1,623 for a small sedan to $2,469 for a medium SUV, with $2,294 for a compact SUV. Young drivers, drivers with claims and some ZIP codes pay much more, so use a real quote for the car you are considering.
• Registration and vehicle fees: most states charge a yearly or two-year renewal, and some add a vehicle property tax or excise based on the car's value. Check your state DMV or your last renewal notice and enter the yearly amount.
• Gas or charging: regular gasoline averaged $4.354 a gallon in the week of October 5, 2026 (EIA). At 1,000 miles a month and 30 mpg, that is about 33 gallons, or $145 a month. AAA's study assumes 15,000 miles a year, so a long commute can easily push this higher.
• Maintenance and tires: AAA puts maintenance, repairs and tires at 11.73 cents a mile on average in 2026 (12.06 cents for a compact SUV). At 1,000 miles a month that is about $120, even though the actual bills arrive irregularly as oil changes, tires and brakes.
• Parking, tolls and car washes: a monthly garage spot, toll transponder charges or a car wash plan are fixed costs. The $50 in the example is only a placeholder.
• Depreciation: AAA counts depreciation and finance charges in its full cost of ownership, which reaches $12,863 a year at 15,000 miles. This calculator leaves depreciation out because it is not a monthly bill, but it decides how much you get back when you sell.

Common mistakes

• Judging by the payment alone: the example payment of $617 is 12.3% of take-home pay, which looks close to the 10% guideline, but adding $532 of running costs brings the total to 23.0%.
• Using gross salary: bills are paid from take-home pay. Dividing your annual salary by 12 makes the share look smaller than it really is, so use what lands in your account after taxes, retirement contributions and health premiums.
• Entering the sticker price: leaving out sales tax and fees understates the loan or the cash you need at signing.
• Stretching the term to make the numbers work: a longer term lowers the share but adds interest, and you stay longer in the period when you owe more than the car is worth, which makes an early trade-in expensive.
• Ignoring negative equity: rolling an old loan balance into the new one raises the amount financed without changing the car. Add it to the price field.
• Counting the same cost twice: if a lease payment or loan bundles a prepaid maintenance plan or GAP coverage, leave the matching field empty instead of entering it again.
• Forgetting lease-end charges: a lease can bill excess mileage and wear at turn-in. Set that money aside or reduce the mileage you expect to drive.

Limits and cautions

• The 20% and 10% lines and the other checks are rules of thumb from personal finance sites. They are not legal limits or lender approval criteria; your loan approval and APR depend on your credit and the lender.
• The same share can feel very different depending on rent, child care and savings goals. Households with large fixed costs may want a lower personal line than 20%.
• The loan payment assumes a standard fixed-rate amortizing loan with no add-ons. For balloon loans, add-on products or unusual fees, enter the payment from the contract with "Enter monthly payment."
• The example values for registration ($300 a year) and parking and tolls ($50 a month), as well as the $40,000 price and $5,000 take-home pay, are illustrations rather than averages. Gas, insurance and maintenance figures come from the sources below but vary by state and driver.
• Depreciation, resale value and opportunity cost are not included. The longer the loan balance exceeds the car's value, the harder it is to switch cars midway.
• Everything is calculated in your browser and nothing is sent to a server. "Copy link" puts your inputs in the address, so check what you share.

Sources

• 01How Much Should My Car Payment Be? — NerdWalletUpdated January 12, 2026: no more than 10% of monthly take-home pay on the car payment and 15% to 20% on total car costs, including gas, insurance and maintenance; loans of no more than 60 months for new cars
• 02How Long Should My Car Loan Be? — EdmundsNovember 19, 2025: the 20/4/10 rule (20% down, four-year loan, total car budget within 10% of take-home pay) described as outdated conventional wisdom; 84-month loans 21.5% of new-car financing in Q2 2025; average negative equity in a new-car loan $7,064 in October 2025
• 03Consumer Credit G.19, Terms of Credit — Federal ReserveReleased October 7, 2026: commercial bank new-car loan rates in August 2026 of 7.54% (60 months) and 7.17% (72 months); finance company new-car loans in June 2026 at 6.3%, 67 months, $41,705 financed
• 04Average New-Vehicle Transaction Price Moves Back Above $50,000 in August — Kelley Blue BookSeptember 10, 2026: average transaction price $50,089 in August 2026; compact SUV $37,722
• 05Your Driving Costs 2026 — AAA (PDF)Full-coverage insurance $2,098 a year (weighted average; compact SUV $2,294), maintenance 11.73 cents a mile (compact SUV 12.06 cents), total cost of ownership $12,863 a year at 15,000 miles
• 06Gasoline and Diesel Fuel Update — U.S. Energy Information AdministrationWeek of October 5, 2026: U.S. average regular gasoline $4.354 a gallon, all taxes included

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