Two ways to find out how much car you can afford
This calculator answers one question from two starting points. If you already know the monthly loan payment you are comfortable with, choose My monthly payment: it works backward through the loan to the highest car price that payment can support. If you would rather start from what you earn, choose My income: it turns a budgeting guideline into a monthly amount and does the same. You also see the sales tax, the interest and the monthly cost once insurance, fuel and maintenance are added.
Example with these numbers: a $600 monthly payment, a 60-month loan at 7.5% APR, $5,000 down, 8% sales tax and $800 in fees. That payment supports a loan of about $29,900, and with the down payment, tax and fees included the car price comes to roughly $31,600. Over the five years you would pay about $6,100 in interest. Replace the example values with your own.
What goes into the price
- Down payment and trade-in lower the amount you borrow. In many states a trade-in also lowers the sales tax, because tax is charged on the price minus the trade-in value; set "Trade-in lowers the sales tax" to match your state.
- Sales tax is filled in when you choose a state: the state rate plus the average local rate from the Tax Foundation's January 2026 table. This is the general sales tax rate. Some states tax vehicles at a different rate or charge separate vehicle taxes and fees, so overwrite the rate with the one on your dealer's quote or from your state's motor vehicle agency.
- Title, registration and dealer fees are entered in dollars and count toward what you finance.
- APR and term set how much of each payment is interest. A longer loan lowers the payment but raises the total interest.
The 20/4/10 rule and other rules of thumb
A common rule of thumb for cars is 20/4/10: put at least 20% down, borrow for no more than four years, and keep your car costs at or below 10% of your gross income. Versions differ in what the 10% covers; this page counts the payment, insurance, fuel and maintenance. Another rule you may see is the 35% rule: spend no more than 35% of your yearly gross income on the car's price.
These are popular guidelines, not official standards. No law or regulator sets them, and other guides suggest other limits, so the page also lets you pick your own share of income. Example: with a $72,000 income and $300 a month for insurance, fuel and maintenance, the 20/4/10 rule leaves $300 of the $600 for the loan payment. At 7.5% over 48 months, with the same $5,000 down payment, tax and fees as above, that supports a car of about $15,400. The rule is strict, so treat it as one point of view. Our 50/30/20 budget calculator and debt-to-income calculator show other ways to look at the same question.
The real cost of owning a car
The payment is only part of the cost. Enter your own monthly figures for insurance, fuel or charging and maintenance and repairs. The calculator does not invent averages, because they depend on the car and how you drive. Get an insurance quote for the kind of car you are considering. For fuel, check the vehicle's official fuel economy rating on FuelEconomy.gov and today's gas prices.
The new car loan interest deduction
For tax years 2025 through 2028, interest on a loan for a new vehicle may be deductible, up to $10,000 a year. The vehicle must be new, for personal use, and have final assembly in the United States, the loan must be secured by a first lien on it, the loan must have been taken out after December 31, 2024, and the deduction shrinks at higher incomes. Used cars and leases do not qualify. The page shows your first-year interest so you can compare it with the cap. The IRS instructions for Schedule 1-A have the exact rules, and our 2025–2028 tax deductions calculator estimates the deduction.
Before you sign
Compare the total cost, not just the monthly payment: ask the lender for the APR, the term and any fees. This calculator is for general information only and is not financial advice. Your lender's offer, your state's vehicle tax rules and your own budget decide what is right for you.
Frequently asked questions
How much of my income should go to a car?
There is no official answer. A popular rule of thumb, 20/4/10, keeps all car costs (payment, insurance, fuel and maintenance) at or below 10% of gross income, and other guides suggest higher or lower shares. The right amount depends on your other bills and savings. Use "My own share of income" to try your own number.
Why is the price lower than I expected?
Sales tax and fees take part of what you can spend, and under the 20/4/10 and custom-share options the monthly insurance, fuel and maintenance you enter come out of the budget before any loan payment is left.
Does this include the car loan interest deduction?
No, the price and payment are calculated without any tax benefit. The page shows your first-year interest, and you can compare it with the deduction rules and estimate the tax effect with the 2025–2028 tax deductions calculator. Whether you qualify depends on the vehicle, the loan and your income.