How Much Car Can I Afford on My Monthly Payment

If you can pay $400 a month, put $5,000 down, finance for 5 years at 6.5%, you can afford a car priced around $24,300. Your loan would be about $19,300 and you would pay roughly $3,400 in total interest over the term. Adding a typical $150/month for insurance and fuel, your all-in cost is about $550 a month. A larger down payment or shorter term lowers the interest you pay; a lower rate stretches your budget further. New-car loan rates average about 6.4% (Experian State of the Automotive Finance Market, Q1 2026), while used-car loans run far higher, around 11.4% (Experian Q1 2026)—so budget a bigger rate buffer if you are buying used. Use the result as a ceiling and shop below it so you keep a buffer for taxes, fees and surprises.