Decent Newsroom
Sign In

How Much Car Can You Afford? 5 Checks Before the Dealership

By Smart Budget Sheets November 10, 2026
Start from income, add insurance/fuel/maintenance, compare total cost not monthly payment, watch depreciation, get pre-approved.

The monthly payment is the number dealers lead with, and it’s the least useful one. A longer loan makes almost any car look affordable. Here’s a quick way to check before you visit a lot.

1. Start from take-home pay, not the sticker price

A common guideline is the 20/4/10 rule: put about 20% down, finance for no more than 4 years, and keep total car costs (payment, insurance, fuel, maintenance) under about 10% of gross income. It’s a starting point, not a law, but it stops a car from crowding out savings.

2. Add the costs that come with the car

Insurance, fuel, maintenance, registration and parking often add up to as much as the payment itself. Get an insurance quote for the exact model before buying: two similar cars can differ a lot.

3. Compare the total, not the monthly

Example: a $30,000 car with $5,000 down at 6%. Over 48 months the payment is about $587; over 72 months about $414. The longer loan looks cheaper each month but costs roughly $1,650 more in interest, and you’re more likely to owe more than the car is worth for longer.

4. Check the depreciation

New cars usually lose a big share of their value in the first few years. A 2-3 year old car often avoids the steepest part of that drop.

5. Get financing quotes before the dealer

A pre-approval from a bank or credit union gives you a rate to compare against. Then you negotiate the price of the car, not the payment.

Free tools

General information, not personal financial advice.

#personalfinance #budgeting #cars
Write a comment