How Much Car Can You Afford?
Calculate the maximum vehicle price you can afford based on your income, expenses, and desired payment.
How Much Car Can You Really Afford?
The conservative rule: spend no more than 10-15% of gross monthly income on your car payment. On a $60,000 salary ($5,000/month), that is $500-750/month. Add insurance ($150-250/month) and fuel ($100-200/month), and total transportation should stay under 20% of gross income. Most financial advisors consider anything above 15% for the payment alone to be overextended.
The Real Cost of Overspending on a Car
The average new car payment of $730/month on a $60K salary consumes 14.6% of gross income — at the upper edge of affordability. Factor in $200/month insurance and $150/month gas, and total transportation hits 21.6%. That extra 5-10% of income diverted to a car instead of investing costs $200,000-500,000 in lost retirement savings over 30 years.
The IRS standard mileage rate for 2026 is 70 cents per mile, which represents the average total cost of vehicle ownership including depreciation, insurance, fuel, maintenance, and financing. At 12,000 miles per year, that is $8,400 — the true annual cost most people underestimate.
