Use your monthly budget to estimate your maximum car price with our car affordability calculator. Adjust down payment, trade-in value, loan term and APR to see how changes affect how much car you afford.
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Breakdown
You can afford cars up to
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Down Payment
-$
Trade-in value
-$
Estimated sales tax (0.00%)
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Other fees*
not included
Total loan amount
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Total interest paid (over life of loan)
+$
Total loan & interest paid
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*Title and other fees and incentives are not included in this calculation, which is an estimate only. Monthly payment estimates are for informational purpose and do not represent a financing offer from Way.com. Other taxes may apply.
To use the car affordability calculator, you should input the following data for getting the most accurate results.
APR = (Periodic Interest Rate * 365 Days) * 100
Once you have gathered the required information, all you got to do is enter them in the respective slots and you’ll get an immediate breakdown of how much you could possibly afford for your car.
Determining how much you can afford for a new car is not rocket science, but as a general guideline, your monthly payment should not exceed 15% of your take-home pay. If you are considering leasing or purchasing a used car, it is recommended that the cost should not exceed 10% of the original price. Make sure you stick to these numbers, as the payment is not the only expense you will have.
Many people overlook fuel and insurance costs, but it's important to factor them in. Let's add 7% of your take-home pay to cover those costs. Ideally, your total budget should not exceed 20% of your monthly take-home pay.
The 10%-15% rule is a helpful wireframe for determining a target price that won't strain your finances. At the same time, it may not suit you, as you have to consider your finances. But it does provide a good baseline to ensure you can comfortably cover your monthly expenses. If you are wondering how much car you can afford, here are some pointers for you to get a more personalized number.
Make time to list your monthly expenses. To calculate your monthly budget, start with your take-home pay. Then subtract your rent or mortgage, bills, groceries, child expenses, savings, and every other spending, no matter how small they seem. You will then get a rough idea of how much car you can afford.
You can use Way's car affordability calculator to get more precise numbers. Although note that the estimates that you get using the calculator don't consider factors such as the trim level, options, sales tax, registration fees, title fees, and any other fees that come by while purchasing a car.
Before you buy or lease a vehicle, determine the fuel expenses and insurance for the vehicle. The costs can vary depending on where you live, your driving record, and the type of vehicle you plan to have.
The EPA has data on fuel economy numbers and estimates annual fuel costs for new and used vehicles. Use the available data and talk to your insurance agent to cover the costs. You're safe if your insurance and fuel costs are less than 7% of your monthly paycheck.
Understanding your car-buying habits, both positive and negative, can help you with an effective strategy for determining car affordability. Start asking questions about your references.
More info on How Much Car Can I Afford
It is advisable to make a down payment of 20 percent of the car's price, if possible. A down payment refers to a significant amount of cash you pay upfront when taking out a car loan.
Refinancing your car loan can be beneficial in two ways: it can help you build equity in your new car immediately while lowering your monthly payments.
Based on your present wage, you can estimate how much automobile you can buy, but using your real take-home pay number will give you a more precise picture of how much you can actually spend. If you just have a rough idea of your annual earnings, use the table below to generate a ballpark figure for your monthly auto payment.
Annual salary (pre-tax) | Estimated monthly car payment limit |
---|---|
$25,000 | $208 per month |
$50,000 | $416 per month |
$75,000 | $625 per month |
$100,000 | $833 per month |
$125,000 | $1,042 per month |
$150,000 | $1,250 per month |
If you cannot afford the car you desire or require, it is beneficial to consider alternative options. This way, you can still accomplish your objectives without accumulating debt. You have the following options to choose from:
If you like the appearance and experience of a modern car, or if you always want the latest advancements in car technology, getting a new car might be the perfect choice. If you're unable to afford the monthly payment for a new car, leasing might be a more suitable choice for you.
If you lease a car instead of buying one, you can enjoy a lower monthly payment. However, there are a few things to consider. For example, there may be limits on the miles you can drive, and any money you pay for the car won't contribute to its value in the long run.
If you don't mind what type of car you drive or want to focus on your finances, buying a used car is a cost-effective way to own a vehicle. Compared to new cars, used cars generally have lower prices, making the monthly payments more affordable. Furthermore, the value of these vehicles depreciates slower than others, and the associated expenses, such as insurance, are typically lower.
There are times when you simply desire the scent of a brand-new car. If your main focus is buying a new car, it's important to research and compare prices from various dealers. When buying a car, it's important to be prepared. Make sure you know the fair market values of the car you want so that you can negotiate the best deal. You might want to buy a basic model without any extra features if you have a limited budget.
When deciding whether to lease or buy a car, there are a few important factors to consider. Your credit score is the most reliable way to determine whether you can afford monthly payments. Additionally, consider the specific day of the week, month, or year when you plan to visit the dealership. For instance, you might find better deals during the holidays or winter.
Whether you should lease or buy a car depends on your financial situation and driving habits. To determine the most affordable way to start driving, consider the amount you can comfortably pay each month upfront and the number of miles you drive. If you have a specific car in mind, you can use a lease vs. buy calculator to figure out the most cost-effective way to spend your money.
More info on Leasing Vs. Buying A Car: How to Crack the Puzzle
Purchasing a car with cash is often a smart financial choice. You will avoid incurring unnecessary debt. This is beneficial because it helps you avoid the responsibility of making monthly loan payments. It also ensures that you purchase a car within your budget. When you borrow money, it is common to feel tempted to buy more expensive vehicles because the cost is spread into smaller monthly payments.
Although purchasing a car with cash has advantages, it may not be the best option for everyone. Saving a significant amount of money is not the only challenge. It can quickly deplete your account. You could also miss out on financing deals, such as 0 percent financing for 36 months, which can make borrowing money more affordable.
If you're considering buying a car with cash, it's a good idea to consider the pros and cons. It is crucial to thoroughly consider the most suitable for your present financial situation.
More info on How to Buy a Car with Cash: A Step-by-Step Guide
The main goal of any loan is to avoid going into a negative financial situation. It is not a good place to be. Making a down payment of 20% can usually keep you from falling prey to an "upside loan." Doing so can lower your monthly payments, help you determine if you can afford the car, and act as a safeguard against negative equity.
Normally, you might be tempted to extend the duration of your car loan to reduce your monthly payments. But don't overlook the hefty interest that covers the affordable monthly payments. Picking a term shorter than 48 months can help you manage your finances better.
It's recommended that the total amount you pay each month, which includes the loan principal, interest, sales tax, and insurance, should not be more than 10% of your gross monthly income to ensure that your car payment is affordable. That's the synopsis of the 35% rule. This way, you can afford top-notch cars without burning a hole in your pocket.
Each insurance provider evaluates driver and car pairings differently. Therefore, obtaining at least five quotes from different providers to compare prices is beneficial. Look at our list of the top car insurance companies for young adults. It will help you compare different insurers and avoid paying more than necessary.
A used car undergoing a pre-purchase inspection is almost as good as a brand-new car. When there is no chip shortage, used cars are much cheaper. Remember that cars typically lose about 15% of their value each year. Therefore, it might be worth looking at models from just a few years ago to find a significant discount.
Dealerships may attempt to include "recommended extras" in the invoice price before you sign. Try to level best to get out of those unless it's necessary. Also, please ask if they can waive the "documentation fee." The fee is not fake, but dealers often overcharge for it. However, many dealers are willing to lower or eliminate the fee if you ask them to.
Car dealerships have been known to use questionable tactics such as adding hidden costs, undervaluing trade-ins, and even telling lies to attract customers. Even if you can get some of the best deals via dealerships, they are not your best option.
We strongly recommend that you prioritize reliability when purchasing a car. When considering a car, browse the reliability surveys from Consumer Reports and test drive the car you are interested in.