--- title: How Much Car Can You Afford? description: Cars are inherently exciting but how much car you can afford depends on a number of factors, and like many things, it comes down to your personal preferences. image: https://rmcu.net/hubfs/Campaigns/Vehicle%20Loans/how-much-car-can-you-afford.jpg --- [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) [Online Banking Login](https://banking.rmcu.net/auth/signin) [Online Banking Login](https://banking.rmcu.net/auth/signin) [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) - - [Home Loans](https://rmcu.net/home-loans) - [Personal](https://rmcu.net/personal) - [Business](https://rmcu.net/business) - [Membership](https://rmcu.net/membership) - [Careers](https://rmcu.net/membership/about-rmcu/careers) - [Contact Us](https://rmcu.net/contact-us) - Search - [Financial Education ▾](https://rmcu.net/blog/how-much-car-can-you-afford#financial-education-nav) - [About RMCU ▾](https://rmcu.net/blog/how-much-car-can-you-afford#about-rmcu-nav) - [Security](https://rmcu.net/membership/security) - [TruStage: Security Alert](https://rmcu.net/trustage-security-alert) - [Money Mastermind](https://rmcu.net/money-mastermind-lessons) - [Financial Counseling](https://rmcu.net/financial-counseling) - [Savvy Money](https://rmcu.net/membership/financial-education/savvy-money) - [Blog](https://rmcu.net/blog) - [Resources](https://rmcu.net/resources) - [RMCU Team](https://rmcu.net/membership/about-rmcu/rmcu-team) - [Member Information](https://rmcu.net/membership/about-rmcu/member-information) - [Annual Meeting](https://rmcu.net/membership/about-rmcu/annual-meeting) - [Community](https://rmcu.net/membership/about-rmcu/community) - [Our History](https://rmcu.net/membership/about-rmcu/history) [back to blog](https://rmcu.net/blog) [Loans](https://rmcu.net/blog/topic/loans) # How Much Car Can You Afford? Read Time **3 mins** | Written by: Rocky Mountain Credit Union [mailto:?subject=How%20Much%20Car%20Can%20You%20Afford%3F&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-much-car-can-you-afford](mailto:?subject=How%20Much%20Car%20Can%20You%20Afford%3F&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-much-car-can-you-afford)     ## 20% Rule It is easy to assume that you can cut costs in other places to help afford the car of your dreams. But that is a lot easier said than done. Similar to the budget for your home, there’s a rule of thumb for your car. You should cap your auto spending at 20% of your income. You’ll probably want to calculate this number monthly. But if you keep good track of your usual expenses and are very organized, you could do it on an annual basis. This rule needs to include all auto and travel expenses, including insurance, fuel, and maintenance, not just the cost of the car itself.  Needs We all use our car a little bit differently to fit with the needs of our lifestyle and our occupation. When you’re asking the question “how much car can you afford?” consider how you’ll use your car. If you’re self-employed, or if you use your car for work, you can take deductions on the miles you put in or on the purchase of the vehicle itself. Consider this when you start budgeting for a new car - it may be your deciding factor between a new or used car. Another consideration is the car's reliability and insurance. The nicer your automobile, the more you’ll have to pay for insurance and potentially in monthly auto loan payments. But if you need your car to be nicer for your job, then it might be worth it to spend more.  ## Loan or Cash It can be tempting to buy a used car outright with the cash you have been saving up for your new car. With this strategy, you don't have to worry about a monthly payment or accruing interest on a loan. This may be a good idea for you, depending on your stage in life. No matter how you decide to purchase your car, you must remember to account for other expenses that come with a car including gasoline and insurance. These expenses are all part of buying a new car, but can be easy to forget when buying a car without a loan.  Don't forget to still consider the 20% rule. When you buy a used car outright, it is easy to forget about budgeting for your car. Used cars sometimes come with unexpected expenses. Make sure you are accounting for this when you purchase a car. While it is hard to budget for these expenses, being aware that they might come up and saving for them will save you in the long run.  ## Other Expenses We’ve heard about these miscellaneous expenses a few times already, but they’re so easy to forget. They’re also essential when you try to answer our question, “how much car can you afford?” The nicer the car, the more expensive the insurance will be, so if you can just barely afford that Porsche, you might want to check your expenses one more time. Maintenance costs also come into play, and if you think you’re saving some cash on a hot used car deal, you might end up paying more than the cost of your ride on repair bills. Whatever you’re looking for in a car, the question of how much car can you afford can be more complicated than it seems on the surface. Be thorough and plan ahead to avoid any unwanted surprises in your monthly budget. If  you want to learn more about budgeting for a car or anything car related, check out our page on the [car buying process.](https://rmcu.net/rmcu-auto-loan-basics)  ***If you enjoyed this blog, take a look at some of our other related articles:*** - [How to Buy A Car: 10 Tips To Get You Behind the Wheel](https://rmcu.net/blog/how-to-buy-a-car-10-tips-to-get-you-behind-the-wheel) - [Leasing VS. Buying a Car](https://rmcu.net/blog/leasing-vs.-buying-a-car) - [Tips For Boosting Your Credit Score](https://rmcu.net/blog/tips-for-boosting-your-credit-score) - [How Much Do You Need In Your Emergency Fund](https://rmcu.net/blog/how-much-do-you-need-in-your-emergency-fund)   ##### Rocky Mountain Credit Union Share the Love [mailto:?subject=How%20Much%20Car%20Can%20You%20Afford%3F&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-much-car-can-you-afford](mailto:?subject=How%20Much%20Car%20Can%20You%20Afford%3F&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-much-car-can-you-afford) You May Like These ## Related Articles ![](https://rmcu.net/hs-fs/hubfs/Blogs/How%20to%20Choose%20a%20Credit%20Card%20That%20Is%20Best%20For%20You.jpg?width=700&name=How%20to%20Choose%20a%20Credit%20Card%20That%20Is%20Best%20For%20You.jpg) Tips from the Pros ### [How to Choose a Credit Card That Is Best For You](https://rmcu.net/blog/how-to-choose-a-credit-card-that-is-best-for-you) With all of the credit cards that are out there, it can be difficult to find which card is best for ... Keep Reading ![](https://rmcu.net/hs-fs/hubfs/AdobeStock_336397740.jpg?width=700&name=AdobeStock_336397740.jpg) Build Credit ### [How Credit Card Interest Works: Understanding Credit Card APRs](https://rmcu.net/blog/how-credit-card-interest-works) Learn how credit card interest works and why 22% APRs can trap you in debt for years. Discover what ... Keep Reading ![](https://rmcu.net/hs-fs/hubfs/RMCU_WhatCC4U_Blog_Images_1.jpg?width=700&name=RMCU_WhatCC4U_Blog_Images_1.jpg) Build Credit ### [How to Pick the Best Credit Card For You](https://rmcu.net/blog/how-to-pick-the-best-credit-card-for-you) Picking a credit card can be overwhelming with so many options to consider. Here are some tips to he... Keep Reading ## [**FOLLOW US ON INSTAGRAM**](https://www.instagram.com/rockymountaincu/?hl=en) - [Privacy Policy](https://rmcu.net/hubfs/DISCLOSURES%20(FILES)/Privacy_Notice.pdf) - [ADA Compliance](https://rmcu.net/ada-compliance) - [Careers](https://rmcu.net/membership/about-rmcu/careers) - [Fee Schedule](https://rmcu.net/hubfs/DISCLOSURES%20(FILES)/RMCU_ScheduleOfCharges_Members_2024-DIGITAL-2.pdf) ![Equal Housing Leader](https://rmcu.net/hs-fs/hubfs/raw_assets/public/RMCU_2022/images/home-lender-logo.png?width=140&name=home-lender-logo.png "Equal Housing Leader") ![American Strategic Insurance](https://rmcu.net/hubfs/raw_assets/public/RMCU_2022/images/asi-logo.svg "placeholder_200x200") Each account is insured by American Share Insurance up to $250,000. By members' choice, this institution is not federally insured. [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) All share and loan accounts are subject to membership eligibility. Equal Housing Opportunity. **RMCU NMLS# 585490** © 2026 Rocky Mountain Credit Union All Rights Reserved × ## You Are Leaving Our Website You are leaving the Rocky Mountain Credit Union website and accessing a third-party website. The privacy, security, and accessibility policies of third-party websites may differ from those of Rocky Mountain Credit Union. We encourage you to review the policies of any website you visit. Rocky Mountain Credit Union is not responsible for the content, privacy, security, or availability of external websites and does not endorse or guarantee the products, services, or information they provide. Stay Here Continue ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Rocky Mountain Credit Union", "url" : "https://rmcu.net/blog/author/rocky-mountain-credit-union" }, "dateModified" : "2023-09-05T15:22:45.271Z", "datePublished" : "2018-06-14T12:15:00.000Z", "headline" : "How Much Car Can You Afford?", "image" : [ "https://rmcu.net/hubfs/Campaigns/Vehicle%20Loans/how-much-car-can-you-afford.jpg" ], "mainEntityOfPage" : { "@id" : "https://rmcu.net/blog/how-much-car-can-you-afford", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://rmcu.net/hubfs/RMCU-logo.svg" }, "name" : "Rocky Mountain Credit Union" } } ```