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Can I Afford a Car?
The average new car in the United States costs around $47,000 and the average monthly payment on a 60-month loan sits near $700–$800. Used vehicles offer a wide range, but even a reliable used car frequently runs $15,000–$30,000 once you factor in financing. Whether a car payment is affordable depends almost entirely on what is already happening in your budget — not just on whether you can get approved for a loan.
Key rule of thumb: Most financial planners recommend keeping your total vehicle costs (loan payment + insurance + fuel + maintenance) under 15–20% of your take-home pay. A single monthly payment that consumes more than 15% of disposable income after fixed expenses is often a warning sign.
What the numbers typically look like
$47,000Average new car price (2025)
7–8%Typical auto loan APR (good credit)
60 monthsMost common loan term
20%Recommended minimum down payment
Why "I can get approved" ≠ "I can afford it"
Lenders approve loans based on credit score, income, and debt-to-income ratio — not on whether the monthly payment leaves you enough room for emergencies, savings, or unexpected repairs. A dealer's finance department may stretch your term to 72 or 84 months to lower the monthly number, but that drives up total interest cost and leaves you underwater on the vehicle for years.
Before committing to any car purchase, it is worth checking three things that lenders will not check for you:
- What will your savings look like after the down payment?
- How much of your disposable income will the payment consume?
- Does this still make sense if you have other major expenses coming up?
How to use the calculator for a car purchase
The calculator below pre-fills a typical car purchase amount. Adjust the price, down payment, APR, and loan term to match your situation. Then add your income, current savings, and monthly obligations to get a personalized affordability score with a plain-language explanation.
Common scenarios
- Buying new with financing: Use a purchase price around $40,000–$50,000, down payment of 15–20%, APR from your pre-approval, and a 60-month term.
- Buying used with financing: A $15,000–$25,000 price range with a shorter 48-month term is common. APR on used cars is often 1–2 points higher than new.
- Paying cash: Enter the full purchase price and select "Cash purchase" as the payment type. The score will focus on liquidity impact.
- Trade-in or partial down payment: Use the "Mixed" payment type and enter what you plan to put down after the trade-in value.
Related resources
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