How much of my income should go to car costs?

Financial advisors recommend no more than 15-20% of your after-tax income on all car costs (loan payment plus running costs combined).

Should I include my trade-in as a deposit?

Yes! Your trade-in value reduces the amount you need to borrow. Get an independent valuation before negotiating with dealers.

How much do running costs really add up to?

For an average car: fuel $150-300/month, insurance $100-200/month, registration $50-80/month, servicing $50-100/month. Total: $350-680/month.

Car Affordability Calculator

Calculator

Calculate how much car you can afford based on your income and expenses

Free to useNo data storedAI insightsUpdated: February 2026

Before you fall in love with a car, make sure you can afford it! This calculator helps you work out a realistic budget based on your income, expenses, and the true cost of car ownership.

Enter Your Details

Real-World Examples

First Car Buyer

Jake earns $4,500/month after tax, has $2,800 in expenses, and $3,000 for a deposit.

Inputs Used:

income:4,500expenses:2,800deposit:3,000

With $1,700 buffer minus ~$400 running costs, Jake can afford ~$350/month loan payment. That's about a $20,000 car with deposit.

Upgrading Family Car

The Smiths have $8,000/month income, $5,500 expenses, currently spend $450 on their old car, and have $15,000 deposit.

Inputs Used:

income:8,000expenses:5,500currentCar:450deposit:15,000

Budget allows ~$600/month on car costs. With $500 running costs, $600 loan payment is comfortable. They can afford ~$45,000 car.

Frequently Asked Questions

Glossary

Running Costs

Ongoing car expenses including fuel, insurance, registration, servicing, and repairs.

On-Road Costs

One-time costs when purchasing including stamp duty, dealer delivery, and registration setup.

Debt-to-Income Ratio

The percentage of your income going to debt repayments - lenders use this to assess affordability.

Related Tools

Car Loan Calculator

Calculate exact repayments for your budget

Total Cost of Ownership

Full cost including all running expenses

New vs Used Calculator

Compare affordability of new vs used

How to Use

1Enter your monthly income after tax
2Add your current monthly expenses
3Include your current car costs (if upgrading)
4Estimate the new car's running costs
5Add any deposit or trade-in value

Key Information

Total car costs (loan + running) shouldn't exceed 15-20% of income
Running costs add $150-$500+ per month depending on the car
A bigger deposit means lower repayments and less interest
New cars have higher insurance but may have lower servicing costs

Pro Tips

Don't forget about stamp duty, registration, and insurance when budgeting
Budget for at least $2,000/year in maintenance and unexpected repairs
Fuel costs vary hugely - factor in your commute distance
Leave some buffer for lifestyle - don't max out your budget

Avoid These Mistakes

Only budgeting for the loan payment, not running costs
Underestimating insurance costs for newer or sports cars
Forgetting about annual expenses like rego and servicing
Stretching to the absolute maximum budget with no buffer

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026