Car Affordability Calculator
↻ Updated 2026Start with the monthly payment you're comfortable with and we'll work backwards — factoring in your down payment, APR, term and sales tax — to show the sticker price you can afford.
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Runs entirely in your browser — nothing you enter is sent to us.How this works
How to read the price your budget supports
$500 a month at 7% over five years, with $5,000 down, buys a $28,271.96 car — not a $30,000 one. Sales tax eats $1,979.04 of the budget before you see a single vehicle, and it never shows up on a window sticker. The affordable price is what's left after the tax takes its cut.
How a monthly payment is converted into a car price
This is the auto-loan formula solved for the wrong end. Normally you know the loan and want the payment. Here you know the payment and want the loan — which is the present value of an annuity: the lump sum today that your stream of payments is worth at your APR.
Getting from the loan to a price takes one more step, and it's the step people skip. Your budget has to cover the car and the sales tax on it. Because tax is a percentage of the price, the price is unknown on both sides of the equation, so it has to be divided back out rather than subtracted.
max loan = pmt × (1 − (1 + r)^−n) ÷ r where r = APR ÷ 12, n = term in months loan + down must cover price + tax, and tax = price × t, so: price × (1 + t) = loan + down price = (loan + down) ÷ (1 + t) sales tax = price × t total interest = pmt × n − loan
- pmt
- The monthly payment you're willing to make — the loan payment only — not insurance, fuel or maintenance
- r
- The monthly interest rate — APR ÷ 12; Edmunds put the June 2026 new-car average at about 7% APR
- n
- The term in months — the slider runs 12 to 84 in six-month steps
- down
- Cash you're putting in at signing — adds to the budget dollar for dollar, but is still taxed as part of the price
- t
- Your combined vehicle sales tax rate, as a decimal — 7% is the page default; five states charge none
The division by (1 + t) is the part worth sitting with. If you have $33,271.96 of buying power and a 7% tax rate, you cannot buy a $33,271.96 car — you can buy a $31,095.29 one, because the tax rides on whatever you buy. Subtracting 7% of your budget instead of dividing gets you a slightly wrong answer, and it's wrong in the direction of overspending.
There's no trade-in field here, which matters if you have one. A trade-in would raise your budget and cut the tax base in most states, so this page understates what you can afford if you're trading a car in — the auto loan calculator models that side properly.
Worked examples
Example: $500 a month at 7% APR over 60 months
The calculator's defaults, so you can follow along on the page. $5,000 down, 7% sales tax, five-year term.
| Monthly payment budgetyour input | $500.00 |
| Supports a loan ofpresent value of 60 × $500 at 7% | $25,251.00 |
| Plus your down paymenttotal buying power $30,251.00 | + $5,000.00 |
| Affordable vehicle price$30,251.00 ÷ 1.07 | $28,271.96 |
| Sales tax$28,271.96 × 7% | $1,979.04 |
| Total interest$500 × 60 − $25,251.00 | $4,749.00 |
$500 a month buys a $28,271.96 car. You'll hand over $35,000 in total — $30,000 of payments plus the $5,000 down — for a car that stickers under $28,300. The $6,728.04 difference is $1,979.04 of tax and $4,749.00 of interest, and neither is negotiable at the dealership.
Example: the same $500 stretched across different terms
Hold the payment, APR, down payment and tax rate at the defaults. Move only the term. Each figure is reachable on the six-month step.
| 36 months$1,806.77 total interest | $19,806.76 car |
| 48 months$3,119.90 total interest | $24,187.01 car |
| 60 months$4,749.00 — the default | $28,271.96 car |
| 72 months$6,672.78 total interest | $32,081.52 car |
| 84 months$8,871.36 total interest | $35,634.25 car |
The same $500 a month buys a $19,806.76 car over three years or a $35,634.25 car over seven — 80% more car for the identical monthly outlay. The interest nearly quintuples to get there. Each extra year of term buys progressively less: months 36 to 48 add $4,380.25 of price, while months 72 to 84 add only $3,552.73 and cost $2,198.58 in extra interest doing it.
Frequently asked questions
What is the 20/4/10 rule for car buying?
Put 20% down, finance for no more than 4 years, and keep total transportation costs — payment, insurance, fuel and maintenance — under 10% of monthly income. It's the most widely cited affordability heuristic in US car buying, and this page's defaults break two of its three legs: 60 months instead of 48, and $5,000 down on a $28,271.96 car is 17.7%, not 20%.
It's also increasingly contested. CNBC reported in June 2026 that financial planners consider the rule calibrated for a car market that no longer exists — new-car prices and rates have both moved enough that a strict 20/4/10 buyer is priced out of most of the new market. Note the assumptions box on this page cites a different threshold again, 15–20% of take-home pay. The rules of thumb disagree with each other; the arithmetic above doesn't depend on any of them.
How much car can I afford on a $500 car payment?
About $28,272 at the defaults here — 7% APR, 60 months, $5,000 down, 7% tax. Change any of those and the answer moves a lot: at 84 months it's $35,634.25, at 36 months it's $19,806.76, and with zero down it drops to $23,599.06.
The more useful framing is what $500 doesn't cover. AAA's 2025 Your Driving Costs study puts average annual ownership at $11,577, or $965 a month, of which the loan is only one part. A $500 payment on this page is $500 toward a bill that also includes insurance, fuel, maintenance and depreciation.
What percentage of income should go to a car payment?
There's no consensus, which is itself the answer. The 20/4/10 rule says 10% of monthly income for all transportation costs combined. NerdWallet's guidance caps the payment alone at 15% of post-tax pay. This calculator's own assumptions box says 15–20% of take-home for total car costs. Those are three materially different budgets for the same driver.
What they share is the object: they cap total car cost, not the loan payment. A $500 payment inside a 10% transportation budget implies roughly $5,000 a month of income once insurance and fuel are counted — not $5,000 to cover $500. This page deliberately takes no view. It converts a payment you've already chosen into a price, and leaves the choosing to you.
How much should I put down on a car?
The common benchmark is 20% on a new car, 10% on used, and the reason is depreciation rather than interest. A new car loses roughly 20% of its value in year one, so a smaller down payment leaves you owing more than the car is worth almost immediately.
In this calculator, a down payment does something specific: it adds to buying power dollar for dollar, then gets divided by (1 + t) along with everything else. Raising the default $5,000 to $10,000 lifts the affordable price from $28,271.96 to $32,944.86 — a $4,672.90 gain on $5,000 of cash, because $327.10 of your extra cash went to the tax on the extra car.
Does a longer car loan mean I can afford more car?
It means the loan supports a bigger number. Whether that's affording more is a different question, and this calculator can't answer it — it only knows the payment you typed.
The mechanics: at 7%, each extra year of term raises the supported price but by shrinking amounts, while the interest climbs steadily. Going 60 to 84 months buys $7,362.29 more car and costs $4,122.36 more interest. The risk isn't the interest, though — it's that a seven-year loan on a car that loses 20% in year one leaves you underwater for most of the term, so the flexibility you bought with a lower payment is exactly the flexibility you lose.
What this affordability calculator doesn't know about you
It's a loan solver, not an affordability test. The word 'afford' in the title is doing more work than the arithmetic behind it supports.
- Your income — There's no income field, so no percentage-of-pay check happens anywhere in this model. The assumptions box mentions a 15–20% of take-home guideline, but nothing in the calculation enforces or tests it. A $2,000 payment returns a price just as cheerfully as a $200 one.
- Everything except the payment — Insurance, fuel, maintenance, registration and depreciation are all absent. AAA's 2025 study put average total ownership near $965 a month — a figure a loan payment alone can't approach. A car you can finance is not necessarily a car you can run.
- Trade-ins — No field for one. If you're trading a car in, your real buying power is higher than this shows and your tax base is lower in most states, so the affordable price here is conservative. If your trade-in is underwater, it's the opposite and the shortfall has nowhere to go.
- Whether anyone will lend you this — The APR is an input, not a quote. It assumes you qualify for the rate you typed at the term you picked, on the car you haven't chosen yet. Lenders cap loan-to-value, price the rate off your credit, and shorten terms on older used cars — none of which is modelled.
- Fees, title and registration — Only sales tax is deducted from your buying power. Doc fees, title and registration are real money at signing and typically get financed too, so the price you can actually shop for is somewhat below the figure shown.
- ·Standard auto-loan amortization; depreciation & running costs are estimates
Rates, brackets and limits here are checked against primary sources. If a number still looks off, email support@realmoneyiq.com and we'll review and fix it.
RealMoneyIQ provides free educational calculators, not financial, tax, investment or legal advice. Results are estimates based on the assumptions you enter and publicly published rates; your actual outcome will differ. Always confirm decisions with a licensed professional who knows your full situation.