Car Affordability Calculator FAQs:

How much can I afford for a car payment?

Everyone's financial situation will vary, but as a general rule, your car payment should be no more than 15 percent of your monthly take-home pay. If you're leasing, it should be no more than 10 percent. You should also factor in the costs of fuel and insurance, which we estimate at about 7 percent of your take-home pay.

How much should you spend on a car payment?

Though we've made the case for a monthly car payment that's 10 percent of your take-home pay for a lease or 15 percent if you're financing the car, that is really the top of the budget. If you've been approved for a $500-per-month vehicle, instead consider one that costs about $400. This approach will free up some funds in your monthly budget to use toward the other costs of ownership, including insurance, fuel and maintenance.

How much should your car cost compared to your salary?

It depends on how much income you have after your bills and expenses, but as a rule of thumb, your car payment should not exceed 15 percent of your post-tax monthly pay. For example, if you make the U.S. median income of $59,039, you could shop for a car that costs up to $554 per month. This translates to a financed vehicle in the $30,000 range.

How much car can I get for $500 a month?

The answer depends on how much you put down, the interest rate, and the length of the loan. Let's say you put zero money down and took out a 72-month loan with a 6 percent APR. In that example, your $500 monthly payment would get you a car that sells for about $30,000. If you were leasing, you could get a more expensive car for the same money, but you would not own it after the three-year lease term is up.