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Just how much car can you afford? Make that responsibly afford. Or, put another way, how much money do you need to make to buy that new Audi S4? Ferrari 488 GTB? BMW 2 Series? Lamborghini Aventador SV? Do I need to sell my old car?

What Car Can I Afford

Just like with most things, there a pretty basic formula for calculating how much car you can park in your garage. In a nutshell, take your monthly car payment, add in insurance and the total shouldn't be more than ten-percent of your gross monthly income.

So, if your car payment plus insurance is $400 per month, you need to be making at least $4,000 that month. Below you'll find a little table breaking down the costs and income requirements for a bunch of price points. Included are a few assumptions in terms of insurance, sales tax and down payment.

Here's are the assumptions:

  • 60-Month Financing (the national average for 2015 according to Forbes)
  • 15% Down Payment
  • 6% Sales Tax
  • 4% Interest on the Loan (the average rate found on BankRate.com)
  • Finally, $150 per month insurance. (estimate of the national average from ValuePenguin.com.)

How Much Car Can You RESPONSIBLY Afford?


Price Down-Payment Monthly Payment Insurance Monthly Payment + Insurance Monthly Income Needed Annual Income Needed
$500,000.00 $75,000.00 $8,379.51 $150.00 $8,529.51 $85,295.10 $1,023,541.20
$250,000.00 $37,500.00 $4,189.75 $150.00 $4,339.75 $43,397.50 $520,770.00
$200,000.00 $30,000.00 $3,351.80 $150.00 $3,501.80 $35,018.00 $420,216.00
$150,000.00 $22,500.00 $2,513.85 $150.00 $2,663.85 $26,638.50 $319,662.00
$140,000.00 $21,000.00 $2,346.26 $150.00 $2,496.26 $24,962.60 $299,551.20
$130,000.00 $19,500.00 $2,178.67 $150.00 $2,328.67 $23,286.70 $279,440.40
$120,000.00 $18,000.00 $2,011.08 $150.00 $2,161.08 $21,610.80 $259,329.60
$100,000.00 $15,000.00 $1,675.90 $150.00 $1,825.90 $18,259.00 $219,108.00
$90,000.00 $13,500.00 $1,508.31 $150.00 $1,658.31 $16,583.10 $198,997.20
$80,000.00 $12,000.00 $1,340.72 $150.00 $1,490.72 $14,907.20 $178,886.40
$70,000.00 $10,500.00 $1,173.13 $150.00 $1,323.13 $13,231.30 $158,775.60
$60,000.00 $9,000.00 $1,005.54 $150.00 $1,155.54 $11,555.40 $138,664.80
$50,000.00 $7,500.00 $837.95 $150.00 $987.95 $9,879.50 $118,554.00
$40,000.00 $6,000.00 $670.36 $150.00 $820.36 $8,203.60 $98,443.20
$30,000.00 $4,500.00 $502.77 $150.00 $652.77 $6,527.70 $78,332.40
$25,000.00 $3,750.00 $418.97 $150.00 $568.97 $5,689.70 $68,276.40
$20,000.00 $3,000.00 $335.18 $150.00 $485.18 $4,851.80 $58,221.60

What do you need to earn for that Ferrari 488 GTB? About $550,000 a year. A Lamborghini Aventador SV in your garage needs $721,800 on your pay stub. Ouch. Audi S4? You're going to need about $160k for a well-equipped version. Good news is that you “only” need around $90,000 per year for that base BMW 2 Series.

Hmmm.

Kind of makes you appreciate leasing.  Start of by finding out how much cash you can get for your car.

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