Auto Affordability

How Much Car Can You Afford?

Calculate your auto loan payment and find out what fits your budget using the 12% rule

The 12% Rule

Keep your car payment at or below 12% of your gross monthly income. This ensures you have enough left for other expenses and savings.

$4,000/mo income $480 max payment

$5,000/mo income $600 max payment

$6,000/mo income $720 max payment

Don't Forget Hidden Costs

Insurance
$100-300/month depending on coverage
Gas/Charging
$100-400/month based on driving
Maintenance
$50-150/month average
Registration & Taxes
Varies by state

Smart Buying Tips

Get pre-approved before shopping
Consider certified pre-owned for value
Shorter loan terms save on interest
Put at least 20% down if possible

Auto Loan Calculator

Monthly Gross Income Your income before taxes (used for 12% rule calculation)

Max payment (12%): $---

Vehicle Price

Down Payment

Trade-In Value (optional)

Interest Rate (APR) Annual Percentage Rate. New cars: 5-8%, Used cars: 7-12%

Loan Term

New vs. Used: Which Is Right For You?

Buying New

Full manufacturer warranty
Latest safety features & technology
Lower interest rates (5-8%)
Rapid depreciation (20-30% in year 1)
Higher insurance costs

Buying Used

30-50% lower purchase price
Slower depreciation
Lower insurance costs
Higher interest rates (7-12%)
Potential unknown history

Pro tip: Certified Pre-Owned (CPO) vehicles offer the best of both worlds with inspected quality and extended warranties.

Frequently Asked Questions

Shorter terms (36-48 months) mean higher payments but less interest paid. Longer terms (60-84 months) lower payments but you pay more interest and risk being "underwater" (owing more than the car is worth). Aim for 48-60 months for the best balance.

Improve your credit score (720+ gets best rates), put more money down, choose a shorter loan term, and shop multiple lenders including banks, credit unions, and the dealer. Get pre-approved before shopping to have negotiating power.

Buying builds equity and is usually cheaper long-term. Leasing offers lower payments and a new car every few years, but has mileage limits and you never own anything. If you drive less than 12K miles/year and want a new car every 3 years, leasing might work.

0% APR sounds great but usually means you don't get manufacturer rebates (often $2-5K). Do the math: sometimes taking the rebate and getting a low-rate loan from a credit union saves more than 0% APR. Also, 0% usually requires excellent credit (720+).