Auto Affordability Calculator

A widely used guideline is the 20/4/10 rule: put at least 20% down, finance for no more than 4 years, and keep total transportation costs (payment, insurance, gas, maintenance) under 10% of gross monthly income. On a $60,000 salary, that means total car costs of $500/month or less. Another approach is to keep the car payment alone under 8% of gross income.

Your car payment should fit comfortably within your budget after accounting for all other expenses. As a baseline, most financial advisors suggest spending no more than 10%–15% of your take-home pay on car payments. If you bring home $4,000/month, aim for $400–$600 for your payment. Remember to factor in insurance, gas, and maintenance — which can add $200–$400/month depending on the vehicle.

Used cars (1–3 years old) typically offer the best value because they have already absorbed the steepest depreciation — new cars lose 20%–30% of their value in the first year. A certified pre-owned vehicle gives you warranty protection at a lower price. However, new cars often come with lower interest rates and manufacturer incentives that can narrow the gap. Run the numbers for both scenarios in the calculator to compare.