Run it on your own numbers
Vehicle Affordability Calculator
Budget on all-in monthly cost rather than the payment, and reverse-solve the price your finances actually support.
Open the vehicle affordability calculatorA five-year breakdown
Assumptions: $32,000 vehicle, 7% sales tax, financed over 72 months at 7.2% APR ($549 a month), 12,000 miles a year at 28 mpg with fuel at $3.30 a gallon, $1,500 a year for insurance, $600 a year for routine maintenance plus a $1,200 tyre-and-brake set once in the period.
| Cost | Five-year total | Per month |
|---|---|---|
| Loan payments (60 of 72) | about $32,900 | $549 |
| Insurance | about $7,500 | $125 |
| Fuel | about $7,100 | $118 |
| Maintenance and tyres | about $4,200 | $70 |
| Sales tax at purchase | about $2,240 | — |
| Total | about $53,900 | about $862 ongoing |
Two things stand out. The all-in monthly cost is about $862, not $549 — roughly 57% more than the payment. And after five years of a six-year loan there is still about $6,300 outstanding, so the car is not yours yet.
Depreciation: the cost you do not pay monthly
Depreciation is not in the table above because it is not a cash outflow — but it is usually the single largest cost of owning a new vehicle. A common pattern is losing a fifth of the value in the first year and roughly half within five. It shows up the moment you sell or trade, as the gap between what you owe and what the car is worth.
That gap is why long loan terms are risky. A 72- or 84-month loan can leave you owing more than the vehicle is worth for years, so an early trade means rolling negative equity into the next loan.
How to budget with this
- 1Get a real insurance quote for the specific vehicle before you buy — it varies more between models than buyers expect, and full coverage is usually required while financed.
- 2Estimate fuel from your actual annual mileage with the mileage calculator or your own commute, not a national average.
- 3Hold back a maintenance reserve monthly instead of waiting for the bill; tyres and brakes arrive at inconvenient times.
- 4Add sales tax and fees to the amount financed with the sales tax calculator before you set a price target.
- 5Then set the budget on the all-in figure using the vehicle affordability calculator, and check the payment against the rest of the month.
If you are pricing a specific vehicle and APR rather than working backwards, the auto loan calculator handles the forward calculation. For the budget side of the decision, how much car can I afford walks through the reverse solve.
Frequently asked questions
- Is a used car always cheaper overall?
- Usually, because the steepest depreciation has already happened, but the gap narrows if maintenance is higher and the used-car interest rate is meaningfully worse. Compare total cost, not sticker price.
- Does leasing avoid these costs?
- It converts depreciation into a fixed monthly cost and removes resale risk, but insurance, fuel and maintenance still apply, and mileage limits carry penalties. Compare all-in monthly cost with all-in monthly cost.
- How much should I keep for maintenance?
- A reserve of roughly $60–$100 a month is a common planning figure for a vehicle in warranty, rising with age and mileage. Track your own spend for a year and adjust.
Assumptions and limits
Every figure on this page comes from the assumptions stated beside it, calculated with the same formulas the linked tools use. Rates, taxes, insurance and running costs vary by lender, state and household, so substitute your own numbers before acting. Nothing here is a lending decision, a tax opinion, or financial advice.
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