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In general, you can afford a car if the monthly payment fits your budget and your total transportation costs are manageable. A good general guideline is to keep your car payment at or below 10% of your monthly take-home pay, and your total transportation costs, including payments, insurance, fuel and repairs, at or below 15%. Here's what to consider when calculating how much car you can afford.
Car Affordability Calculator
An easy way to estimate how much car you can afford is to use a car payment calculator. Experian's free car affordability calculator below starts with your desired monthly payment and estimates the loan amount and loan annual percentage rate (APR) you may be able to qualify for.
To use the calculator:
- Choose your desired monthly payment and loan term.
- Choose a new or used vehicle.
- Estimate your credit score range.
You'll see estimates for how much you may be able to borrow and your loan APR, which can help you narrow down vehicles in your price range. Adjust the loan term and maximum payment to see how much car you can afford.
Tip: Borrowing less or getting a lower interest rate can lower your monthly payment. A longer loan term can reduce your payment, too, but keep in mind that a longer loan term costs you more in interest over time.
†The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.
What Car Payment Can I Afford?
An affordable car payment is the amount you can pay each month while covering other bills and debt payments, meeting your savings goals and managing the other costs of owning a car.
To see how much room you have in your monthly budget for a car payment, consider:
- After-tax income: If your income fluctuates, use an average of the past six months of take-home pay as your baseline.
- Fixed expenses: Fixed expenses include things like rent, insurance, loan payments and child care.
- Variable expenses: Review bank or credit card transactions for the past three months to get an average for variable expenses like groceries, entertainment and personal care.
- Debt payments: Evaluate your current debt obligations before adding a new loan to the mix. If a large chunk of your income already goes to debt payments each month, you may have less room for a car payment.
- Savings: Car payments shouldn't get in the way of saving for your emergency fund, retirement, children's college funds or other goals like buying a home.
- Other transportation expenses: Estimate the cost of fuel, insurance and maintenance for your desired car. Ideally, total transportation costs (including your car payment) shouldn't exceed 15% of your monthly take-home pay.
Learn more: How to Make a Budget
What Car Loan Can I Afford?
Once you know what monthly payment fits your budget, it's time to estimate how big a loan you can afford. Your loan APR, term, down payment, fees and credit score help determine what loan amount is realistic for you.
- Loan term: Choosing the shortest term you can afford can save you money. The average new-car loan term was just over 64 months among borrowers with excellent credit in the fourth quarter (Q4) of 2025, according to Experian data. The longer the loan term, the more interest you'll ultimately pay.
- APR: A car loan's APR factors in both the loan's interest rate and any fees the lender charges, giving you the true annual cost of borrowing. When comparing loan offers, the APR is a key metric to consider.
- Down payment: Making a larger down payment reduces how much you need to borrow. A smaller loan can lower both your payments and your total interest, and could even improve your odds of qualifying for a lower interest rate.
- Taxes and fees: Sales taxes, license and registration fees, and fees for any extras such as warranty plans can be rolled into your loan, but this increases your monthly payment and loan size. You can get your car with a smaller loan by paying these costs upfront or waiving optional add-ons.
- Credit score: Your credit score impacts the APR you can qualify for. A higher credit score can help you get a lower APR, which can mean significant savings over the life of your auto loan.
Be aware: Trading in a car with positive equity can reduce the amount you need to borrow. However, if you owe more than the car is worth, you'll have to pay off the remaining balance, either as a lump sum or by rolling it into the new loan.
How Your Credit Score Affects Your Car Loan Affordability
The table below shows the impact your credit score can have on your APR and monthly car payment. In Q4 2025, borrowers with the lowest credit scores had APRs on new car loans averaging more than 11 percentage points higher than borrowers with the highest scores, Experian data shows.
Monthly payments don't always rise in a straight line with lower credit scores, since vehicle prices, loan amounts and terms vary by borrower. But lower credit scores generally translate to higher borrowing costs overall.
Average Auto Loan Interest Rate and Payment by Credit Score
- New Car
- Used Car
| Credit Score Range | New Car APR | New Car Monthly Payment |
|---|---|---|
| Super prime (781 or above) | 4.66% | $748 |
| Prime (661-780) | 6.27% | $773 |
| Near prime (601-660) | 9.57% | $810 |
| Subprime (501-600) | 13.17% | $792 |
| Deep subprime (500 or below) | 16.01% | $767 |
| Credit Score Range | Used Car APR | Used Car Monthly Payment |
|---|---|---|
| Super prime (781 or above) | 7.70% | $535 |
| Prime (661-780) | 9.98% | $523 |
| Near prime (601-660) | 14.49% | $545 |
| Subprime (501-600) | 19.42% | $557 |
| Deep subprime (500 or below) | 21.85% | $558 |
Source: Experian data as of Q4 2025; VantageScore® 4.0 used
Check your credit score before you decide to buy a car. If it's not where you want it to be, and you don't need to buy a car immediately, taking time to improve your credit before moving forward could save you money on an auto loan.
Tip: A lower APR can reduce your monthly car payment, but the bigger benefit is paying less in total interest over the life of your loan.
What Total Car Costs Should I Include When Budgeting for a Car?
Your total transportation costs include more than just your car payment. To calculate them, start with your monthly costs:
- Insurance: The average cost of car insurance is $2,295 annually, according to Experian data, but your cost can vary depending on your age, location, driving history and other factors. Shopping around and comparing quotes can help you find affordable coverage.
- Fuel: Based on your average mileage and your desired car's fuel efficiency, you can estimate the monthly cost of gas or charging.
- Parking: If you pay to park your car at work or to rent a parking space at home, include that in your vehicle expenses.
Also factor in occasional or one-time costs such as:
- Maintenance and repairs: On average, expect to spend about 11 cents per mile driven annually on maintaining and repairing your car, according to AAA estimates.
- Taxes and registration: Sales taxes plus fees for license and registration cost an average of $813 per year, according to 2025 AAA data. These costs typically aren't included in the sticker price. Your state's department of motor vehicles may have a calculator you can use to estimate registration fees.
- Dealer fees: Dealerships may charge fees like destination fees, documentation fees and other fees, some of which aren't negotiable.
- Add-ons: You may be offered extras such as extended warranties, paint protection or fabric protection. Dealers often roll these costs into your loan, which increases your monthly payment.
Learn more: Ways to Reduce Your Car Expenses
How to Save Money When Buying a Car
The easiest way to save money when buying a car is often to reduce your loan amount or lower your APR. The following tips can help:
Buy Used
On average, the monthly loan payment for a used car is $230 less than for a new car, according to Experian data from Q4 2025. Keep in mind, though, that maintenance and repair costs will likely be higher for an older car. Purchasing a certified pre-owned car could give you peace of mind. Certified pre-owned vehicles are typically late-model vehicles that have undergone a thorough inspection and reconditioning.
Learn more: Questions to Ask When Buying a Used Car
Get Preapproved
Getting preapproved for a car loan before visiting the dealership lets you compare rates and negotiate from a stronger position. Lenders can estimate the loan amount and interest rate you're likely to qualify for based on information including your credit history, income and employment. You can then take the best preapproval offer to the dealership and see if they can do better.
Tip: Preapproval generally results in a hard inquiry on your credit report. When shopping with multiple lenders, aim to keep all your applications within a 14-day period to minimize negative impact to your credit score.
Negotiate With the Dealer
You can negotiate many aspects of a car purchase, including the vehicle price, the value of your trade-in, your loan APR, dealer fees and the cost of add-ons. Researching a car's price at other dealerships and the book value of your trade-in before heading to the dealership can give you a negotiating edge.
Tip: Shopping for a car at the end of the month, quarter or year when salespeople often have quotas to fill can help you get a good deal. There are often promotions around holidays, too, and last year's models are typically discounted when new models are released.
Limit Add-Ons
Dealers may try to sell you add-ons or features you don't need, such as extended warranties, maintenance plans or protection packages. They often roll these costs into the loan so you don't have to pay out of pocket. However, financing add-ons raises your monthly payments, so feel free to say no.
Learn more: How to Buy a New Car: A Step-by-Step Checklist
Frequently Asked Questions
How Much Car Can I Afford Based on Salary?
Your car payment shouldn't exceed 10% of your monthly take-home pay, and your total transportation costs, including car payment, maintenance, fuel and insurance, shouldn't exceed 15% of your monthly take-home pay.
For example, if your monthly take-home pay is $4,000, you should aim to keep your car payment under $400 and your total transportation costs under $600.
How Much Is Car Insurance Per Month?
The national average cost of car insurance is $2,295 annually or $191 per month, according to Experian data. The actual price you pay for car insurance may differ depending on factors such as the type and amount of coverage you buy, your age, your vehicle and your driving record. Before buying a car, you can compare insurance quotes from several insurers for the vehicles you're considering to get an idea of how much car insurance might cost.
What Is the Average Car Payment?
The average monthly car payment is $767 for a new car and $537 for a used car, according to Experian data from Q4 2025. However, your car payment may be higher or lower, depending on what you can afford and your loan amount, loan term and credit score.
The Bottom Line
To decide how much car you can comfortably afford, use a car payment calculator to estimate a car payment, and then factor in the total costs of car ownership. Considering your budget, savings goals and other expenses will help you keep your car payments manageable.
If you're working to improve your credit score before shopping for an auto loan, consider signing up for free credit monitoring from Experian to track your progress. Credit monitoring also gives you alerts of important changes to your credit score, so you can act quickly to prevent problems that could stall your loan approval.