Home How much car can I afford? – All you need to know for avoiding financial liabilities
How much car can I afford? – All you need to know for avoiding financial liabilities

How much car can I afford? – All you need to know for avoiding financial liabilities

Buying a vehicle can be an exciting and overwhelming process at the same time. While thinking about purchasing a car, we instantly imagine ourselves driving the dream car. But before getting into our automobile, we should pass many steps. It is mandatory to have a well-prepared plan especially in case we are limited in budget.

Nonetheless, it is hard to find affordable options on a limited budget, it is still possible to get the desired car. In order to save money, and avoid any additional financial liabilities, I’ve prepared a bunch of information. Reading the blog can help you to answer the following questions: what car can I afford, how much car payment can I afford based on salary, how to save money while purchasing, and many interesting details. So, let’s start the journey by determining what car fits your needs the best!

What car can I afford and what I really need?

The modern person is so dependent on vehicles that it is hard to imagine a person without owning a car. Even if you don’t own an automobile, I am sure you plan to get it sooner. I assume that’s the reason why you are interested in this topic. You, like many other individuals, might have a dream car. Sometimes it is hard to make our dreams come true due to a limited budget. You might ask, how much can I afford for a car. It is important to have a correct answer to this question for avoiding any extra costs. Besides, it’s notable that sometimes we mix what we really need in what we can afford. In other words, we might dream of an expensive sports car and be sad in case we can’t afford it. But on the other hand, after analyzing some details, we might find out that the sports car is not what we truly need. The correctly chosen automobile can avoid you a lot of trouble. So, let me share with you some details for determining the vehicle you can afford.

 Nowadays, there are hundreds of automobile manufacturers and models. In a big variety, it is very hard to make a choice and find the one automobile that fits you the best. The first thing that will help you to narrow the existing variety is to determine the budget! In case you find it difficult to determine the budget, below we will discuss the issue in detail and answer your question of how much car payment can I afford. Until that, don’t forget to take into account your living area while choosing a model. That can help you to determine the type of car that provides you comfortable rides. For instance, in case you live in a mountainous area, you should buy an SUV or any other model with a high suspension. 

While talking about what car you can afford, don’t forget that it doesn’t mean only the initial cost. You will have an additional outcome besides the initial cost. In some states, you have to pay tax fees. In additional costs, you should take into account insurance payment, the monthly budget for fuel and some unforeseen expenses, repair costs. Analyzing those details will give you a clear picture of what car you can afford. Now, let’s move on and answer your question of “how much car can I afford” in detail, including the additional costs.

How much car payment can I afford including the additional costs?

As you already know the actual cost of an automobile doesn’t include only the initial cost, but also insurance, tax fee, fuel, insurance, and repair costs. Of course, the main part takes the initial cost, but don’t forget to take into account additional payments as well, that might top up to 20% of the car cost. In general, the answer to the question of what car can I afford depends on your income and savings. Even if you are limited in budget, you can still get an affordable automobile. Below I’ll share with you some tips and tricks that help you to save money while purchasing a car.

The best way to save money while buying a vehicle is to pay by cash! Take into account that the annual interest rate can vary between 11-17% in case you want to get finance for the purchase. As a rule, the average interest rates for used cars are much higher than for loans on new models. Many banks even won’t approve loans for used cars over 8 or 10 years. Loans for newer cars are lower due to less of a risk. There is a small chance that new automobiles will break down. The annual interest rate (APR) depends on your credit score, and if it is between 501 – 600 range, then the interest rate for a new automobile will be 11,33% and for the used one – 17,78%. As you see, there is a huge difference between interest rates for new and used vehicles, but that doesn’t mean that you can save money by purchasing a brand new vehicle.

Another way to save money is to get a used vehicle. Besides the fact that used vehicles cost much cheaper than new ones, you can avoid price depreciation. It’s a well-known fact that the new vehicle loses its 40% value in three years after purchase. 

Now after reviewing the useful tips for saving money, let me answer your question of how much can I afford for a car including additional costs. As you already know in some states you have to pay sales tax. For instance, in California, you have to pay a 7.5% state sales tax rate regardless of the automobile you’ve purchased. The rate is different for each state. 

Besides tax fee, you should take into account the annual insurance cost that might vary between 565-1,674 dollars, depending on many factors. The insurance cost is calculated individually upon analyzing the vehicle model, year of the release, annual mileage, age of the driver, occupation, etc. Upon analyzing the initial cost of a car, tax fee, and the insurance cost, I guess you will find an answer to the question of how much car payment can I afford including total payments.

How much car can I afford based on salary?

There are many different points of view about the issue. Some individuals think that the cost of a vehicle shouldn’t exceed 20% of your gross (pretax) monthly income. Others find it acceptable even if you pay half of your annual income on a vehicle. All in all, it is an individual issue and depends on the income and outcome the person can afford. In general, it is preferable not to pay more than 10-15% of your net income for an automobile, taking into account that you will have some additional monthly costs as well. 

I guess now you don’t have any additional questions about the issue of, how much car can I afford, and ready to make the correct decision!


All in all, nonetheless the planning process for buying a vehicle might seem overwhelming, it leads us to the desired result. By taking into account the above-mentioned information, we can save a lot of money and make a good decision. The answer to the question of how much car can I afford depends on many factors. It requests analyzing the initial and total costs of a vehicle, which might include insurance, tax fee, and repair costs as well. Hence, don’t rush before making the final decision. Hopefully, you found the given information interesting and will use it in practice while buying an automobile. Wish you good luck!

Tiago Ramirez

has had a passion for vehicles since childhood. He has transformed his love for cars into mastering mechanical skills and sharing useful tips with car enthusiasts. Connect and stay updated.