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Lease vs Buy Car

Car Affordability Calculator

A common starting point: keep the car payment near 10% of gross income, and keep total debt payments — new car included — under 36%. This calculator turns those guardrails plus your actual loan terms into concrete numbers: a monthly payment budget, the loan that payment supports at your APR and term, and the maximum vehicle price after down payment, trade-in, sales tax and fees. Every input is an editable estimate, and the results update as you type.

Income & budget
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$

Loans, cards and other car payments. Rent is optional — just be consistent about counting it.

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10% is the classic conservative target. A 36% total debt-to-income ceiling always applies on top.

Loan, taxes & upfront cash
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$

Equity from your current car — applied like extra down payment.

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Longer terms raise the price you can finance — and the total interest you pay.

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Your car budget

$37,735max vehicle price

Monthly payment budget
$750.00/mo
Max loan amount
$37,876
Debt-to-income with this payment
16.67%
Upfront cash applied
$3,000

Conservative — 10% of income

$37,735

$750.00/mo payment budget

Stretch — 15% of income

$55,434

$1,125.00/mo payment budget

Same loan terms, sales tax and upfront cash — only the share of income changes.

How this budget is derived

  • Payment budget $750.00/mo — the lower of your 10% income target and what a 36% total debt-to-income ceiling leaves after $500.00/mo of existing debt.
  • That payment supports a $37,876 loan over 5 years at 7% APR.
  • Loan plus your $3,000 of upfront cash, minus sales tax and $500 in fees, leaves $37,735 for the vehicle itself.

Income targets and the 36% debt-to-income ceiling are budgeting rules of thumb, not personal financial advice. Insurance and fuel are not included — the total cost of ownership calculator covers those. Every formula is documented on the methodology page.
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How this calculator works

The budget is the lower of two ceilings: your chosen share of gross monthly income, and whatever a 36% total debt-to-income ceiling leaves after your existing payments. That monthly budget is then run through inverse amortization — the largest loan whose payment fits at your APR and term — and finally converted into a vehicle price by adding your down payment and trade-in, then netting out sales tax and fees. A popular stricter heuristic, the 20/4/10 rule (20% down, a loan no longer than 4 years, all-in car costs under 10% of income), is worth checking your numbers against — as a rule of thumb, not advice. Every formula and default is documented on the methodology page. Once you know your budget, the next question is how to pay for the car — start with the lease vs buy guide.

Frequently asked questions

What percent of my income should go to a car payment?
A widely quoted rule of thumb keeps the payment near 10% of gross income; the stricter 20/4/10 heuristic adds 20% down and a loan of four years or less. These are guardrails, not financial advice — the right number depends on your other obligations and goals. The calculator lets you set the target anywhere from 5% to 20% and shows a conservative (10%) and stretch (15%) budget side by side, with every assumption documented on the methodology page.
Does this calculator include insurance, fuel and maintenance?
No — it sizes the loan payment only, because that is what lenders underwrite. Insurance, fuel, maintenance and depreciation add substantial running costs on top of the payment. Before committing at the top of your budget, run a specific car through the Total Cost of Ownership Calculator to see the all-in monthly cost.
How does my debt-to-income ratio limit the car budget?
The calculator caps total monthly debt — your existing payments plus the new car payment — at 36% of gross monthly income, a common conservative underwriting guideline documented on the methodology page. When existing debts already consume most of that headroom, the ceiling, not your income target, becomes the binding constraint and the tool flags it. In that situation, paying down other balances usually raises your car budget faster than stretching the loan term.
Should I buy new or used on a tight budget?
New cars typically lose value fastest in their first years — that steep early depreciation is the single biggest cost of driving a new car. On a tight budget, a lightly used car lets the first owner absorb that drop, so more of your payment buys car instead of depreciation. See car depreciation explained and model any price point with the Car Depreciation Calculator.

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