Income, Cash & Ownership
🚗 Monthly Ownership Costs
Result
💡 Three Budget Tiers (Conservative / Balanced / Aggressive)
| Tier | Max Price | Down | Loan Pmt | Total Burden | DTI % |
|---|
📊 Visual Analysis
Related Tools & Guides
📚 Car Affordability Knowledge
The 20/4/10 Rule
A widely used guideline for car affordability: put down at least 20%, finance for no more than 4 years, and keep total transportation costs (payment + insurance + fuel + maintenance) under 10% of your gross monthly income. For example, if you earn $5,000/month, total car costs should stay below $500/month. This rule prevents overextending on a depreciating asset. If you can't meet all three criteria, the car is likely too expensive for your budget.
Total Cost of Ownership, Not Just Sticker Price
The purchase price is only part of what a car costs. Over 5 years, a $30,000 car can cost an additional $15,000–25,000 in: depreciation ($9,000–12,000), insurance ($5,000–8,000), fuel ($4,000–7,000), maintenance and repairs ($2,000–4,000), and taxes/fees. Electric vehicles have lower fuel and maintenance costs but higher depreciation and insurance. Always compare total cost of ownership, not just monthly payment, when choosing between vehicles.
Buying vs Leasing
Buying builds equity, has no mileage restrictions, and is cheaper long-term (especially if you keep the car 8–10 years). Leasing offers lower monthly payments, a new car every 2–3 years, and warranty coverage, but you never own the car and face mileage/ wear penalties. Leasing makes sense if you want a new car frequently and drive under 12,000 miles/year; buying is almost always more economical if you keep the car past the loan term. For most people, buying a reliable used car (2–3 years old) offers the best value.