The payment is the number
they sell you.

The 15% rule caps your total car costs — payment plus insurance — at 15% of monthly take-home pay. Most financial planners treat 10% as conservative and 20% as the absolute ceiling. The national average in 2025 sits at 32% of take-home, which is why so many households feel permanently squeezed.

On a $60,000 salary your monthly take-home is roughly $3,900. The 15% rule puts your ceiling at about $585/month for payment and insurance combined. If insurance runs $175/month, your actual car payment ceiling is around $410. Most dealerships will try to put you in something $200-300 higher than that.

It depends entirely on income. On a $90,000 salary, $700 is inside the 15% ceiling. On a $60,000 salary, it represents 22% of take-home — well above it. Use the calculator above with your exact numbers. The payment alone is not the answer. Your income is half the equation.

AAA's 2024 driving cost study puts the average all-in monthly cost of a new vehicle at $1,020 — that includes the payment, insurance, fuel, maintenance, registration, and depreciation. The payment is usually only 60-65% of what you actually spend on the car each month.

The payment alone totals $36,000 over 60 months. Add insurance at $175/month and that is $46,500. Add interest on a 7.5% APR loan and the total loan cost rises to around $42,000. The real cost question is the opportunity cost: $600/month invested in the S&P 500 for 5 years at historical returns is worth approximately $46,000.

Three signals: your APR is above 7% and your credit score has improved since you bought, you are in a 72-84 month term because the payment felt manageable, or you have negative equity. All three are refinancing signals. The calculator shows your interest total — if it is more than 15% of your principal, it is worth running refi numbers.

Compare your APR to what you would earn investing. If your car loan is at 7.5% APR and the S&P 500 averages 10.5%, investing wins mathematically. If your loan is at 4% or below, investing almost always wins. If your loan is above 8%, paying it off first is often the better guaranteed return — especially if the loan has no prepayment penalty.