Car Affordability Calculator · Practical guide
The 15 Percent Rule for Car Buying
Your car payment should not exceed 15% of monthly income minus your other debt payments.
At a glance
The short answer
The 15% rule caps your car payment at 15% of your monthly income minus your existing monthly debt payments. Earning $5,000 a month with $400 in debt payments, your ceiling is $750 - $400 = $350 per month. If debt pushes the result below zero, you cannot safely afford a car payment at all.
| Monthly Income | 15% Ceiling | Max Payment (No Debt) | Max Payment ($400 Debt) |
|---|---|---|---|
| $3,000 | $450 | $450 | $50 |
| $5,000 | $750 | $750 | $350 |
| $7,000 | $1,050 | $1,050 | $650 |
Interactive tool
Car Affordability Calculator
Enter your own values, then compare the result with the examples below.
Why subtract debt first
Lenders and budgets both fail when payments stack up. Student loans, credit cards, and personal loans already claim part of your income, so the rule treats 15% as the total room available for all such obligations — the car gets whatever is left.
From payment to car price
The payment ceiling becomes a loan amount through your rate and term. A $350 payment at 6.5% over 60 months finances about $17,888; add your down payment and trade-in for the full budget. The calculator above does this chain in one step.
Where the rule is conservative
Fifteen percent is deliberately tight — it leaves room for insurance and fuel, which often add another $250-$300 monthly, plus savings and surprise repairs. Some guidelines allow 20% for the payment alone, but that leaves little slack when anything else goes wrong.
If the number feels too low
Paying down existing debt raises your ceiling faster than earning more. Clearing a $300 credit card payment has the same effect on your car budget as a $24,000 raise.
Frequently Asked Questions
Does the 15% rule use gross or net income?
The rule is usually applied to gross monthly income, and this calculator uses whatever figure you enter. Using take-home pay gives a stricter, safer budget.
Should insurance and gas fit inside the 15%?
Ideally, yes — total car costs including insurance and fuel should stay near 15-20% of income. This tool shows the payment ceiling and the total monthly cost separately so you can check both.
What counts as existing debt for the rule?
Any recurring monthly obligation: student loans, credit card minimums, personal loans, and other car payments. Rent or mortgage is typically excluded since the rule targets consumer debt.
Is the 15% rule the same as the 20/4/10 rule?
No. The 20/4/10 rule says put 20% down, finance for no more than 4 years, and keep total car costs under 10% of gross income — a stricter framework. The 15% rule focuses only on the payment relative to income and debt.