Car Budget Calculator
How much car can you actually afford? Calculate your maximum affordable vehicle price based on gross monthly income rules, custom percentages, or target monthly payments. Factor in running costs like insurance, fuel, and maintenance for a complete view of ownership.
Max loan payment you are comfortable with each month
Trade-in value minus any loan balance outstanding
State/local sales tax added to the car's price
Oil changes, tires, repairs fund
Monthly Payment Breakdown
Affordability Best Practices Check
20% Down Payment
Put down at least 20% of the purchase price (£4,500 paid upfront represents 21.1% of the car price).
4-Year Term (48 months)
Finance the car for no more than 48 months (entered term is 48 months).
10% Gross Income Limit
Keep total monthly vehicle expenses under 10% of gross monthly income (£680 is 15.1% of your gross income).
Affordability Warnings
- Total monthly car costs represent 15.1% of your gross income. Keeping this under 10–15% is generally recommended for financial health.
Loan Balance Over Time
Amortisation Schedule
| Month | Payment | Interest | Principal | Remaining Balance |
|---|---|---|---|---|
| Month 1 | £400.00 | £91.36 | £308.64 | £16,558.36 |
| Month 2 | £400.00 | £89.69 | £310.31 | £16,248.05 |
| Month 3 | £400.00 | £88.01 | £311.99 | £15,936.06 |
| Month 4 | £400.00 | £86.32 | £313.68 | £15,622.38 |
| Month 5 | £400.00 | £84.62 | £315.38 | £15,307.00 |
| Month 6 | £400.00 | £82.91 | £317.09 | £14,989.91 |
| Month 7 | £400.00 | £81.20 | £318.80 | £14,671.11 |
| Month 8 | £400.00 | £79.47 | £320.53 | £14,350.58 |
| Month 9 | £400.00 | £77.73 | £322.27 | £14,028.31 |
| Month 10 | £400.00 | £75.99 | £324.01 | £13,704.30 |
Frequently asked questions
What is the 20/4/10 rule of thumb for car budgeting?
The 20/4/10 rule recommends: 1) putting at least 20% down on the car, 2) financing the vehicle for no more than 4 years (48 months), and 3) keeping your total monthly transportation costs (loan payment, insurance, fuel, maintenance) under 10% of your gross monthly income.
Should I calculate my car budget using gross or net income?
Rules of thumb like 20/4/10 use gross (pre-tax) income. However, budgeting with net (take-home) income is safer since tax brackets, pensions, and student loans reduce the cash you actually have. For net income budgeting, a common guideline is to keep total vehicle expenses under 15–20% of your take-home pay.
How do monthly running costs affect my overall budget?
Purchasing a car involves ongoing costs beyond the loan payment. Insurance, fuel/charging, routine maintenance (tires, brakes, servicing), and parking/tolls often add another 30–50% to your monthly vehicle outlays. Factoring in these costs ensures you don't buy a car you can afford to finance but cannot afford to run.
Does trade-in equity count toward my down payment?
Yes. If you trade in your old car, the net equity (the trade-in value minus any outstanding loan balance on that car) acts exactly like cash and counts toward your down payment. For example, if your trade-in is worth £5,000 and you owe £2,000 on it, you have £3,000 of trade-in equity to apply to your next car.