How much car can I afford?
This works backwards from your income to a price, and it counts running costs — the part that makes most affordability answers wrong.
You can afford a vehicle costing about
$14,460
$250.00 a month in repayments, plus $250 running costs
- Total car budget
- $500
- 10% of gross income, monthly
- Available for repayments
- $250
- after running costs
- You can borrow
- $10,460
- at 6.9% over 48 months
- Plus your deposit
- $4,000
- giving the price above
A guideline, not a lending decision. Lenders weigh your existing debts, credit history and debt-to-income ratio, none of which are used here.
Questions
›How much of my income should go on a car?
A common guideline caps all car costs at 10% of gross income, with 20% down and a term no longer than four years. That 10% has to cover insurance, fuel and maintenance as well as the repayment, which is why the loan itself gets much less than people expect.
›Why does this include insurance and fuel?
Because they come out of the same money. A calculator that turns your whole car budget into a repayment overstates what you can afford by hundreds a month, and running costs on a newer or more powerful car are often what breaks the budget.
›Does a bigger deposit let me buy more car?
Directly, yes — every pound of deposit adds a pound of price at the same repayment. It also lowers the amount financed, so you pay less interest and reach positive equity sooner.
›Will a lender agree with this figure?
Not necessarily. Lenders assess your existing debts, credit history and debt-to-income ratio, none of which are used here. Treat this as a budget you set, not an approval you have.