What car can I afford 75k?

How Much Car Can I Afford

In the short driveway of a modest multi-family home in rural New Hampshire is a special car with a memorable license plate. If read phonetically, it says ‘My Money.” It is a new Corvette, and it may be equal in value to the home. In that home is a person living their best life, having made a dream a reality. That person bought a supercar, and if the plate is true, used all of their money.

The question, “How much car can I afford,” doesn’t have just one answer. However, Car Talk understands that, for most people, the question is genuine. Thousands of car shoppers ask it of themselves every day. We dug through endless boring stories from media outlets related to personal finance to bring you an answer.

Never Ask Your Dealer How Much Car You Can Afford

Before we go too far, if you have walked, biked, or ride-shared your way to a car dealership and Googled the story’s title, stop right now! Slow your roll. Whatever you do, never, ever ask this question to a car dealer. It’s the equivalent of walking into the dealership with your wallet open and saying, “Please take all of my money.”

Many car dealers (OK, it’s all of them) will try hard to push you away from a budget-based purchase you can afford toward a deal based on “your monthly payment.” They do this because they want to hide away all the hidden costs, fees, and golf club memberships they will stuff into your purchase agreement. Know how much you can spend before you go shopping, and have your loan already sorted out before you even begin to shop online.

How to Determine How Much Car You Can Afford

Get a Loan Before You Shop

If you found this page, we can assume you need a vehicle. However, you also need a place to sleep and food to eat. You need to sort out your budget to determine how much you can afford. Let us give you some advice; Do create a budget, and then search for a loan before you shop for your car. The process of searching for a loan is a fantastic reality check. Most lenders won’t help you beyond ensuring they can get paid, but they have many helpful questions that will open your eyes to how much you can afford to pay each month to them.

Helpful Guidelines and Rules of Thumb

Looking for a quick answer to the question, “How much car can I afford?” Well, here you go! This is a list of what financial experts say about how much car you can afford:

NerdWallet — Car buyers should spend no more than 10% of their take-home pay on a car loan payment and no more than 20% on car-related expenses.
MarketWatch — Spending No More Than 15% of Your Monthly Take-home Pay on Car Payments Is Recommended. Your car-related expenses shouldn’t exceed 20% of your monthly take-home pay
American Family Insurance — Your car-related expenses shouldn’t exceed 20% of your monthly take-home pay.
Bankrate — Spend no more than 20 percent of take-home pay on a car — including the cost of car payments, fuel, insurance, and other related expenses.
MoneyUnder30 — The car’s price should never exceed 35% of your gross annual income. If you’re just looking for a basic ride to get to work and back, consider capping the car price at 25% or even 15% of your annual income instead.

There is a pretty tight consensus among financial experts on what your percent of earnings budget should not exceed.

The Actual Cost of Owning a Car

Why Fuel Matters So Much

Here’s something most car publications won’t tell you — If you choose a muscle car or a pickup truck, your single biggest expense for this vehicle, especially a used one — may be fuel costs. Let’s look at the annual fuel costs for some cars and see what we discover:

Car Model	EPA Annual Fuel Cost Estimates*	Monthly Fuel Cost

*Based on national averages for energy costs and 15,000 miles per year driven.

The type of vehicle you select will have a big impact on how much you have left over for the actual car payment. If you are struggling to make the budget for a car purchase add up, start by shopping for hybrids and EVs. Doing so leaves a lot of room for insurance and other hidden costs.

Finance Charges and Insurance Can Spoil The Fun

One thing we can’t offer you is an accurate insurance or finance charge. That’s because how much you pay for these is specific to you. Call your agent, or start with a new one if you need an estimate for car insurance. Your bank can tell you how much of your annual car payment will be finance charges.

Creating Your Budget

AAA recently reported that the average annual cost to own a car has passed the $10,000 mark. That is the average, so it includes inexpensive and pricey models. AAA suggests a comprehensive budget to determine your true costs of ownership. Creating a budget for a new car is not hard, but it is also not what most folks expect. Here is how we would budget for a car:

Budget Item	Monthly Cost	Annual Cost

How Much Car Can I Afford Chart

Hourly Pay	Annual Income After 10% Tax	Monthly Income After 10% Tax	15% Per Month For Car Payment

*Our chart above assumes that you work 40 hours each week and are paid for each of the 52 weeks per year.

The Fixed Cost of Ownership Model

One reality for many shoppers with limited income is that a car maintenance bill or unexpected repair can break your budget. If you have no choice but to buy an old beater, it will break, and it will be painful to pay a lot for the repair on a car that is not really worth repairing.

But what choice is there? Well, eventually, you will have a choice to opt into financing a new car. This presents you with a new opportunity to obtain a fixed cost of ownership instead of a variable one.

Once you can buy new, you can choose a brand with a long warranty or short one. Included maintenance or pay-as-you-go. Let’s compare two affordable brands that make fine automobiles, Nissan and Hyundai, to illustrate our point.

Nissan Model: Zero included maintenance, short warranty ending in 60K miles.
Hyundai Model: Three years of included maintenance, longest warranty ending in 100,000 miles.

As you can see, with Nissan, you start paying for maintenance within a few months of ownership. Oil changes. Tire rotations. Rinse and repeat. By the time you get to year three, you will have paid out about $700 in maintenance costs. If you instead bought a Hyundai model, you would have paid zero on these things.

Now let’s say that after driving 15,000 miles per year for about five years, you have a big problem with the transmission. Your Nissan warranty is up. You’re on your own. Shell out $5,000 to fix the transmission. If you bought a Hyundai, you pay zero because the warranty lasts much longer. Don’t get us wrong. We love Nissan vehicles. It’s just that in the world of great cars, some come with no included maintenance and short warranties, and some come with many years of included maintenance and very long warranties. If you are on a tight budget, which would work better for you?

Why “Old” People Buy “Boring” Cars

Related to the warranty and included maintenance topic is reliability. We’ve looked so hard at reliability charts our eyes bled. We wanted to find out which model had the single best reliability in all of the car world. Well, it turns out it is the Toyota Prius. It’s not as good at smokey burnouts as a Camaro SS, but it offers you the very best chance to be on time for a job interview. Or your wedding. Or to take your new baby home from the hospital. Do you see where we are going with this?

Certain brands (Toyota, Mazda, Hyundai, Kia) have a very long track record of real-world reliability and affordability. You may be wondering how this relates to “How much car can I afford.” In our opinion, it is directly related because we assume you really mean, “How much running car can I afford to buy?” If you are looking for a doorstop in the shape of a pretty car, we are not the right source. If you want one that works, think about our examples and head to your favorite consumer advocacy publication to check out the reliability scores of the models you are considering. Even the best brands have some duds and even average brands have some real reliability gems.

Pricey Options To Avoid When Car Shopping

If you made it this far, congratulations! Now you get to read our rant on pricey options. Since you are thinking hard about your budget, don’t blow it at the very last minute. When you buy a car, there is a person sitting in an office waiting for you. The AFTER-SALES PERSON. The job of this loathsome individual is to sell you thousands of dollars in car-related rubbish. Paint protection. Body side molding. Volatile organic compounds to protect your seats. Extended warranties. Stolen car tracking. None of it has any value to a new car owner. Skip it all. You can always go back later and buy it for cash. Never finance this junk.

FAQ

How much car can I afford?

Car Talk scoured the dark side of the web to find out the truth behind the age-old question, “how much car can I afford?” The answer is “About 15% of your after-tax earnings should be your monthly car payment.” That’s the over-simple answer. Read our full guide to learn the truth — if you’re ready.

How much should I spend on a car if I make $100,000?

The full answer is, “create a detailed budget,” but in the interest of time, let’s say your monthly car payment should not exceed $1,200 per month.

How much can I spend on a car if I make $60,000?

The full answer is, “create a detailed budget,” but in the interest of time, let’s say your monthly car payment should not exceed $750 per month.

What is the best car for folks with an annual salary of $75,000?

An annual salary of $75K means you can afford a monthly payment of around $800 if need be. We’d check out the mid-trim Mazda CX-5, a top-trim Toyota Prius, a Ford Mustang Maverick, or a Chevy Bolt EUV if they strike your fancy.

Editor’s note and disclaimer: Car Talk is supported by our fans, readers and listeners. When you click on some of the links on our website, we may receive referral compensation. However, you should know that the recommendations we make are based on our independent editorial review and analyses.

Car Buying, Selling and Owning

Car Buying

Car Selling

Car Owning

Warranty Reviews

Endurance Warranty Review
CARCHEX Warranty Review
Toco Warranty Review
Select Auto Protect Warranty Review
autopom! Warranty Review
GSAN Warranty Review
Protect My Car Warranty Review
Olive Warranty Review
ForeverCar Warranty Review
Ally Financial Warranty Review
Zurich Warranty Review
AAA Warranty Review
CarShield Warranty Review

Tire Brand Reviews

Michelin Tires Review
Bridgestone Tires Review
Goodyear Tires Review
Pirelli Tires Review
Falken Tires Review
Cooper Tires Review
Continental Tires Review
BFGoodrich Tires Review
Firestone Tires Review
Hankook Tires Review
Kumho Tires Review

Time Kills

10 Annoying Things Drivers Do

10 Cars for Social Distancing

20 Signs you Should Avoid a Garage

Quick Links

How much can I borrow?

This tool calculates loan amounts and mortgage payments for two underwriting scenarios: one that uses aggressive underwriting guidelines and one that uses conservative guidelines. The calculator uses the lower of two ratios for each set of results: payment-to-income ratio (also called housing ratio) and debt-to-income ratio (also called debt ratio). When the economy is strong, lenders are more aggressive and raise these ratios to compete for business. When the economy is weak, lenders are more conservative and lower their ratios. The following housing ratios are used for conservative results: 29% for down payments of less than 20% and 30% for down payments of 20% or more. A debt ratio of 36% is used for all down payments. The following ratios are used for aggressive results: housing and debt ratios of 31% and 38%, respectively, for down payments of less than 10%; housing and debt ratios of 32% and 40%, respectively, for down payments of 10% or more but less than 20%; and housing and debt ratios of 33% and 41%, respectively, for down payments of 20% or more.

Estimate your FICO Score range
Answer 10 easy questions to get a free estimate of your FICO Score range
Instant Access to Your FICO ® Score
90% of Top Lenders Use FICO ® Scores. Do you know yours? Get Access Now!

Page footer

Products

View product links

Learn

View learn links

Company

View company links

About Us
Terms of Use
Privacy Policy
Affiliate Program
Accessibility

Get Our App

Download iOS app on the App Store
Get Android app on the Google Play Store

Credit Education

View credit education links

Credit scores
What is a FICO Score?
FICO Score versions
How scores are calculated
Payment history
Amount of debt
Length of credit history
Credit mix
New credit
Credit reports
What’s in your report
Bureaus
Inquiries
Errors on your report?
Calculators
Know your rights
Identity theft
FAQ
Glossary

IMPORTANT INFORMATION:

All FICO ® Score products made available on myFICO.com include a FICO ® Score 8, and may include additional FICO ® Score versions. Your lender or insurer may use a different FICO ® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Scores and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide «credit repair» services or advice or assistance regarding «rebuilding» or «improving» your credit record, credit history or credit rating. FTC’s website on credit.

PRIVACY NOTICE: When you visit this website we collect your browsing activities on our site and use that information to analyze and research improvements to the website, and to our products and services. When you register for our products and services, we also collect certain personal information from you for identification purposes, such as your name, address, email address, telephone number, social security number, IP address, and date of birth. Further information is available in our FICO Data Privacy Policy. For visitors with visual disabilities, access to this website, including our FICO Data Privacy Policy, is available through assistive technologies, such as BrowseAloud, JAWS, VoiceOver, Narrator, ChromeVox, and Window-Eyes. More details on software and accessibility are available at WebAIM.org.