Auto Loan Affordability Calculator

Time for a new vehicle? It's wise to start with what you can afford and not just what you want to drive. This calculator will show you the sweet spot between what you want and what you can afford.

Enter a preferred monthly payment, your down payment (cash you have on hand or trade-in value), the loan term you want, and the interest rate you hope to get.

Using a car payment affordability calculator can help you avoid overextending your budget when you buy a new car. It provides a clear picture of what you can comfortably afford based on your income and expenses. An auto loan affordability calculator takes into account factors like interest rates and loan terms, as well as insurance, which helps prepare you for the true cost of buying a new car.

The answer depends on how much you are willing to pay. Just as an example of how this car payment calculator works, let’s assume you make $100K annually and want to adhere to the tried and true 50/30/20 rule for your budgeting. With that in mind, an affordable car payment would be somewhere between $583 to $874. As long as your car payment stays within that range, you’ll be following proper budgeting rules to answer the question: “I make $100K a year, what kind of car can I afford?”

“What car can I afford with a $40K salary?” is a common question. As a general rule of thumb, your car payment should fall between $250 to $375 a month for that level of income.

To get that estimate, we used the 50/30/20 rule to break down the needs, wants, and savings/debt repayment portions of a $40K salary. Within the “needs” portion of the budget (which equates to ~$1,250 per month), we estimate using somewhere between 10% and 15% for a car payment.

How much should I pay for a second hand car? It depends on several factors, including the car's age, mileage, condition, and market demand. Researching comparable models online can give you a baseline of what to pay, but it’s strongly recommended to have a mechanic check out the vehicle before you accidentally purchase a junker that looks fine from the outside.

Make sure to factor in other costs, like potential repairs, insurance, and maintenance, when coming to a fair price on a used car. Sites like Kelley Blue Book (KBB) and Edmunds can provide valuable pricing information.

The car payment average per month in the United States fluctuates, but generally the range is $500 to $700 for new cars and $350 to $500 for used cars. This average includes other necessary payments, like loan terms and interest rates. When considering your own auto affordability, use these averages to gauge a reasonable monthly car payment for a new car.

A "normal monthly car payment" depends on individual circumstances, but there’s some general rules of thumb that can help define “normal” for you. Financial experts recommend keeping your total monthly car expenses, including insurance and maintenance, below 20% of your take-home pay.

When you use the auto loan affordability calculator above, make sure your “Preferred Monthly Payment” is below 20% of your take-home pay.

The best time to refinance your car loan when interest rates drop, your credit score improves, or your financial situation changes. Refinancing can lower monthly payments or even shorten the life of your loan, which can help you pay less in interest overall. Be aware that you will probably need to wait at least six months post-loan before refinancing.

If you decide to refinance your car, our auto refinance calculator will certainly come in handy when calculating whether or not it’s worth it to refinance your car.