Car Affordability Calculator

Rates depend heavily on the car and the borrower. A 60-month new-car loan at commercial banks averaged 7.14% (Federal Reserve G.19, May 2026); across all lender types the average was 6.35% on new cars and 11.19% on used (Experian State of the Automotive Finance Market, Q2 2026). Used borrowing costs more because the collateral is worth less and less predictable.

Long loans are now the norm rather than the exception: the average new-car loan ran 69.5 months and the average used-car loan 67.9 months (Experian State of the Automotive Finance Market, Q2 2026), so five to seven years is ordinary. A longer term lowers the monthly payment and raises the total interest, and it keeps you owing more than the car is worth for longer, which matters if it is written off or you need to sell.

A widely used guideline keeps everything the car costs - payment, insurance, fuel, maintenance, tax - inside roughly ten to fifteen percent of take-home pay. It is a rule of thumb rather than a law, and it is the total that counts: insurance on a newer car can undo what a lower interest rate saved.

Leasing is the other way to hold a car. The monthly cost is usually lower than financing the same vehicle, because you are paying for the depreciation over the lease term instead of the whole car, and repairs normally fall inside the warranty. The trade is that you own nothing at the end, mileage is capped with a charge per mile over it, and the payments start again with the next car.