On a $100,000 salary, you should aim to spend $20,000-$35,000 on a car. Here’s how to calculate what you can afford.
Car Affordability Rules
| Rule | Calculation | Max Car Price |
|---|---|---|
| 20% of annual income | $100,000 × 0.20 | $20,000 |
| 35% of annual income | $100,000 × 0.35 | $35,000 |
| 20/4/10 rule | See below | $30,000-36,000 |
The 20/4/10 Rule Applied
- 20% down payment: $7,200 (on $36,000 car)
- 4-year loan max: 48 months
- 10% of gross income: $833/month for payment + insurance
| Car Price | Down (20%) | Loan | Monthly Payment (7% APR) |
|---|---|---|---|
| $25,000 | $5,000 | $20,000 | $479 |
| $30,000 | $6,000 | $24,000 | $575 |
| $35,000 | $7,000 | $28,000 | $670 |
| $36,000 | $7,200 | $28,800 | $689 |
All payments assume 48-month loan at 7% APR
Your Monthly Budget on $100K
| Item | Amount |
|---|---|
| Gross monthly income | $8,333 |
| Take-home (after taxes, ~TX) | $6,600 |
| Max car payment (10% gross) | $833 |
| Typical insurance | $170 |
| Max for payment alone | $663 |
What Car Can You Get for $30,000-$35,000?
New cars in this range:
- Honda Accord ($29,610)
- Toyota Camry ($28,950)
- Mazda CX-5 ($30,750)
- Subaru Outback ($33,495)
- Honda CR-V ($33,150)
Used cars (1-2 years old):
- Toyota Highlander
- Honda Pilot
- Acura TLX
- Lexus ES
Total Cost of Ownership
| Expense | Monthly | Annual |
|---|---|---|
| Loan payment | $575 | $6,900 |
| Insurance | $170 | $2,040 |
| Gas | $200 | $2,400 |
| Maintenance | $120 | $1,440 |
| Registration | $25 | $300 |
| Total | $1,090 | $13,080 |
That’s 13% of your gross income — very comfortable.
The $100K Dilemma: Lifestyle Creep
At $100K, you can technically “afford” more car. But consider:
- Retirement: Are you maxing your 401(k)?
- Housing: Keeping total housing under 28%?
- Other goals: Do you want to buy a house soon?
Buying a $25K car instead of $35K = $10K more toward a down payment.
