How much car can I afford?

$
$
$
%
yrs
$
You can afford a car at
$17.9k

$337 a month for 4 years

A month$337
Interest$2,236
You borrow$13.9k
$17.9kof a $32.0k car$17.9kof a $32.0k car

On $62.0k a year you can afford a car at $17.9k. That is $337 a month for 4 years, of which $2,236 is interest.

Your deposit clears the twenty percent the rule asks for. The term is inside the four-year ceiling.

How to use this, and the parts people get wrong
  • The cap is what the car costs you monthly in total - payment, fuel, insurance, upkeep - not the sticker price.
  • A longer term shrinks the payment, not the cost. It moves money later, plus interest.
  • The down payment reduces what you finance; it does not change what you can afford to run.

Why the loan length matters

Stretching the loan to seven years buys a car worth $8,025 more, and costs $4,095 more in interest to do it.

$337the monthly payment this assumes
$2,236interest over the whole loan

Your budget at every rate

Same income, running costs and deposit; only the rate and the term change. Your rate is marked.

Rate4-year budget7-year budget
3.0%$19,210$29,479
4.0%$18,911$28,630
5.0%$18,619$27,820
6.0%$18,335$27,046
7.0%$18,059$26,307
8.0%$17,791$25,600
9.0%$17,529$24,925
10.0%$17,274$24,280
12.0%$16,785$23,072
14.0%$16,320$21,965

Questions people ask

How much car can I afford on my salary?
Take ten percent of your gross monthly income, subtract what insurance, fuel and upkeep already cost you, and what is left is the payment you can carry. That payment prices the loan at your rate and term, and your deposit sits on top. On the seed figures here that is a car at about $17.9k.
What is the 20/4/10 rule?
A used-car buyer's convention: put twenty percent down, borrow for no more than four years, and keep all car costs inside ten percent of gross income. It is not a law. It is the line past which a car starts eating the rest of your money.
Should I take a seven-year car loan?
It buys a more expensive car for the same monthly payment, which is exactly why it is offered. It also means paying interest for years on something that is losing value the whole time, and being underwater on the loan for most of them.
Does this work outside the United States?
Yes. The arithmetic is the same in any currency: type your income and deposit in your own money and every figure on the page comes back in your money.
Does the price include insurance and fuel?
No, and that is deliberate. Running costs are subtracted BEFORE the payment is worked out, so the price you see is what the car itself can cost once the running costs are already paid for.

Method and sources

  • Standard loan arithmeticPresent value of an annuity at your rate and term
The calculation

All car costs are capped at 10% of gross monthly income. Your stated running costs come off that cap first; what remains is the loan payment. The payment is priced into a loan at your rate and term with standard present-value arithmetic, and your deposit is added to reach the car price.

What it assumes

A level-payment loan and running costs you have already estimated. Tax, registration and dealer fees vary too much by place to assert here, so the ceiling is before those.

What these figures do not cover
  • The 20/4/10 ratios are a convention, not a promise of approval.
  • Depreciation is not modelled: the car is worth less than this the day you buy.
  • Running costs are your own estimate, and they are the figure people lowball.

Last updated July 2026.

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