Car Affordability Calculator
What car you can afford — not just the repayment, but the running costs that decide whether it actually fits.
The repayment is the easy part.
How the car affordability calculator works
The repayment is the easy part. The rule of thumb that matters is total transport cost — repayment, insurance, fuel, registration and maintenance — under about 15% of take-home pay, and the purchase price under about half of annual income.
Most affordability trouble comes from the running costs, not the loan. A car that costs 10% of income to finance can easily cost another 8% to run.
Formula: price = loan capacity + deposit − trade-in
Worked examples
| Inputs | Affordable car price | Note |
|---|---|---|
| 550/month budget, 5,000 deposit | $32,125.14 | about 32,000 of car |
| A longer term | $40,287.59 | a bigger car and much more interest |
| Running costs included | $49,386.59 | pushes past the 15% guideline |
FAQFrequently asked questions
How much should I spend on a car?
A common guideline is total transport cost — repayment, insurance, fuel, registration, maintenance — under 15% of take-home pay.
Is a longer loan term better?
It lowers the repayment and raises the total cost, and it increases the time spent owing more than the car is worth.
Why do running costs matter so much?
Because they are often comparable to the repayment. A 550 repayment can easily come with 470 of insurance, fuel and maintenance.
What is negative equity?
Owing more than the car is worth. Long terms and small deposits make it near-certain for the first few years, because cars depreciate faster than the loan amortises.
Should I buy new or used?
A new car loses 20 to 30% in its first year. That depreciation is usually the largest single cost of ownership, and buying at two to three years old avoids most of it.
Where these figures come from
- CFA Institute — Quantitative Methods: The Time Value of Money — the discounting, annuity and IRR conventions used here
- US Federal Reserve — Regulation Z (Truth in Lending), APR calculation — why APR includes fees where a nominal rate does not
- ASIC MoneySmart — the Australian regulator's own consumer calculators
Last checked: September 2026. These are the standard textbook formulas; the conventions named are those of the CFA Institute curriculum and ISO 80000 usage.