Car Affordability Calculator

Put at least 20% down, finance for no more than 4 years (48 months), and keep total monthly transportation costs (loan payment, insurance, fuel, maintenance) under 10% of your gross monthly income. The rule is conservative by design. This calculator uses take-home pay as its base rather than gross, so a 10% take-home ratio is roughly equivalent to 7-8% of gross for most W-2 earners.

Most auto lenders want total monthly debt payments (including the new car payment) below 36% of gross income. The calculator estimates your gross by dividing take-home by 0.78 to account for federal, state, and FICA taxes, then flags a warning if your combined DTI hits 36% or higher. Above 43%, approval gets harder and the APR offered climbs sharply.

US full-coverage insurance averages around $200 per month, but the spread is wide. A 30-year-old with a clean record in Ohio might pay $110; a 20-year-old financing a sports car in Michigan can pay $450 or more. Get an actual quote for your zip code, age, and the specific vehicle before you commit to a purchase price.

Registration, title, and dealer doc fees (often $200-$800), gap insurance on financed cars, tires (roughly $800 every 50,000 miles), brakes, oil changes, and depreciation. New cars lose about 20% of value in year one. The calculator lets you fold insurance and a maintenance estimate directly into the affordability math so these costs reduce your max price, not just your savings.

Lease if you want a new car every 2-3 years, drive under 12,000 miles a year, and prefer predictable low monthly payments with no long-term repair risk. Buy if you plan to keep the car 6 or more years, drive a lot, or want to build equity. Buying a 2-3 year old used car and keeping it 8-10 years is almost always the lowest total-cost path.