Buying a Car – Car Loan Calculator

What car payment can I afford?

To keep a balanced budget, it is typically recommended that no more than 15-20% of your take-home pay goes towards transportation costs. Don’t forget – this figure also includes gas, insurance, and maintenance. Therefore, it is usually recommended that your car payment is no more than 10% of your monthly take-home pay. If your take-home pay is $4,000 per month, you could reasonably afford a $400 per month car payment. This may vary depending on your specific situation, so it’s good to check this number against your own budget.

How much should I spend on a car?

Once you’ve determined your affordable monthly payment, you can use the calculator below to figure out how much you can spend on a car. 

The maximum affordable car price will be based on your monthly payment, the interest rate on your car loan, and the term of the car loan. Typically, a longer term on your car loan will allow you to afford a more expensive car. However, the interest rate is typically higher on car loans with longer terms, so you may end up paying more in interest over the life of the car loan.


  • Desired Monthly Payment – This is the amount of money you will pay every month towards your car loan.
  • Down Payment or Trade-In Value – This is the amount of money you will pay up front. It can include the value of your trade-in as well.
  • Interest Rate – This is the interest you will pay on the loan. It is calculated as a percentage of the total loan amount. In 2021, the average interest rate was 3.64% for new cars and 5.35% for used cars. Talk to a lender and get pre-qualified if you’d like to know the exact rate you’ll pay.
  • Number of Months – Car loans typically come in terms of 24, 36, 48, 60, 72, 84, and 96 months. That’s a range of 2-8 years.


  • Affordable Car Price – This is the maximum car price you can afford with the monthly payment and interest rate above. Don’t forget about taxes and other fees, such as registration. This is the price you want to be paying “out the door”.