Find out how much car you can afford based on your monthly budget, or calculate the monthly payment for a specific vehicle. Enter your down payment, trade-in value, loan term, and APR for a complete breakdown including total cost of ownership.
Car Affordability Calculator
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Result
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Monthly Payment
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Total Interest
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Total Cost (w/ tax)
How Much Car Can You Afford?
Financial experts typically recommend keeping your total monthly car expenses (payment + insurance + fuel + maintenance) below 15–20% of your take-home pay. The monthly payment alone should ideally stay under 10–15% of your monthly take-home income.
A common rule of thumb is the 20/4/10 rule: put at least 20% down, finance for no more than 4 years, and keep total transportation costs under 10% of gross income. The longer the loan term, the lower the monthly payment — but the more you pay in total interest.
Car Payment Formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
P = Loan amount (price + tax − down − trade-in)
r = Monthly rate (APR / 12 / 100)
n = Loan term in months
Example: $27,000 loan at 6% APR for 60 months
r = 0.06/12 = 0.005
n = 60
Payment = 27000 × [0.005×(1.005)^60] / [(1.005)^60−1]
Payment ≈ $521.99/month
Frequently Asked Questions
What is a good car loan interest rate?+
In 2024–2025, average new car loan rates ranged from about 5% to 9% depending on credit score and lender. Rates below 5% are excellent; above 10% is considered high. Your credit score has the biggest impact on your rate — scores above 720 typically qualify for the best rates.
Should I choose a longer or shorter loan term?+
A shorter term (36–48 months) means higher monthly payments but significantly less total interest paid. A longer term (72–84 months) lowers monthly payments but increases total cost and the risk of being "underwater" (owing more than the car is worth). If possible, stick to 60 months or less.
How does a trade-in affect my car loan?+
A trade-in reduces the amount you need to finance, just like a down payment. If you owe money on your trade-in, that negative equity may be rolled into the new loan, increasing your loan balance. Always get your trade-in valued at multiple dealers and check sites like Kelley Blue Book before negotiating.