What Car Can I Afford With 100k Salary? Maximizing Your Budget for the Best Fit

You have some financial freedom with a $100k yearly salary, but what kind of car can you afford on that budget?

A $100k salary makes it possible to afford a car loan of up to $36k, based on the commonly used 36% rule, which multiplies your Salary by 0.36 to come up with a dollar amount you can afford on total debt service, including mortgage, credit cards, and car loans.

Cars you can afford with a $100k salary, according to the 36% rule, include the Honda CR-V, Subaru Forester, Volkswagen Atlas, and the Kia Telluride.

Keep reading as we explore the different types of cars within this $100k salary budget and car options for people who make $60k/year, $75k/year, $120k/year, and other salaries.

What Car Can I Afford With 100k Salary?

A six-figure annual income may lead you to believe you can afford an expensive car, and often people will overspend or overborrow on a vehicle.

Financers often follow the 36% rule: a consumer's total debt servicing, including their car loan, credit cards, and mortgage, should not exceed 36 percent of their total income.

Calculate Monthly Payments Using The Rule Of 36%

Step 1) Calculate Your Monthly Salary

$100,000 divided by 12 months is a salary of $8333 per month.

Step 2) Calculate 36% Of Your Monthly Salary

$8333 X 0.36 is $3,000.

Step 3) Calculate Existing Debt Servicing Costs

For this example, we'll assume you have a $1700 monthly mortgage payment and a $500 monthly credit card payment which adds up to $2200.

Step 4) Calculate Available Room For Car Payment

$3,000 minus $2,200 is $800.

From this example, we can calculate that the person in this hypothetical situation can afford an $800 car payment.

However, if the person had $1000 in credit card debt, they would only be able to afford a $300 monthly payment.

This shows the importance of minimizing our monthly payments to give us the most flexibility possible regarding our finances and purchases.

So using the calculations above, we can finally answer your question.

What Car Can I Afford With 100k Salary?

So let's say you have $2200 in existing debt meaning your max monthly car payment should be no more than $800.

A couple of factors that significantly will impact the monthly payments that we need to keep in mind are the loan duration and downpayment:

• Loan Duration: we will try to stay at a five-year loan duration.

• Downpayment: we will try to minimize the down payment as much as possible.

• Credit Rating: your credit rating directly affects the interest rate you will pay. For this study, we will assume you have a good credit rating.

• Interest Rates: Interest rates are consistently changing for various reasons that we won't get into in this article. For this study, we'll use the interest rates posted by the Bank of America on October 16, 2022, which are 4.79% for new cars and 4.89% for used cars.

Of all the new cars currently in this price range, the most popular new cars you can afford on a $100k salary include:

• new Honda CR-V models (starting at $26,800 with a monthly payment of $544)

• new Subaru Forester models (starting at $25,895 with a monthly payment of $526)

• new Mazda CX-5 models (starting at $25,900 with a monthly payment of $526)

• new Volkswagen Atlas models (starting at $34,335 with a monthly payment of $696)

• new Kia Telluride models (starting at $33,390 with a monthly payment of $676)

What Used Car Can I Afford With 100k Salary?

Buying a used car has its benefits and drawbacks. On the one hand, you can purchase a larger, higher quality vehicle with more options if you buy a used one. However, on the other hand, a used car is usually at least a few years old with the associated wear and tear.

Also, used vehicle financing is often slightly higher than new vehicle financing.

If you want to keep your monthly payment on your car lower so that you can pay off other debts, the most popular used cars you can afford on a $100k salary include:

• 2012 Jeep Grand Cherokee (around $18k-$20k used, monthly payment of $408)

• 2015 Nissan Rogue SL (around $18k used, monthly payment of $368)

• 2018 Ford Escape S (around $20k used)

• 2015 Honda Accord Sport (around $20k used)

What Car Can I Afford With 200k Salary?

The 36% rule, which states that total debt servicing costs shouldn't exceed 36% of your gross income, also applies to a $200k annual salary.

Applying the 36% rule to a $200k annual income and a $2200 debt serving costs leaves us with a generous $1600 monthly auto loan payment.

Some new popular car models you can afford on a $200k annual salary include the following:

• 2023 Jeep Wrangler Sport RHD ($45,595, with a monthly payment of $922)

• Tesla Model Y Long Range ($65,990, with a monthly payment of $1331)

• 2023 BMW 5 Series (starting at $54,800, with a monthly payment of $1106)

What Car Can I Afford With 120k Salary?

According to the 36%, the maximum monthly auto loan payment you can pay on a $120k annual salary while servicing other debt of $2200 a month would be $1400.

With a $120k salary each year and other debt payments of $2200, according to the 36% rule, you would be able to afford a monthly auto loan payment of $1400. A $1400 auto loan payment would pay for many new cars, including:

• 2023 Volkswagen Golf GTI (starting around $32,000, with a monthly payment of $648)

• 2023 Audi A3 (starting around $36,000, with a monthly payment of $729)

• 2022 Toyota Avalon (starting around $38,000, with a monthly payment of $769)

What Car Can I Afford With 80k Salary?

Using the 36% rule, an $80,000/year salary and $1500 in other monthly debt payments leave $900 for a monthly car payment.

Some new car models that you can afford with an 80k salary and $1500 in other debt servicing costs include:

• 2022 Kia Seltos (starting at $22,590, with a monthly payment of $459)

• 2022 Toyota RAV4 (starting at $26,975, with a monthly payment of $548)

• 2022 Honda CR-V LX (starting at $26,800, with a monthly payment of $544)

What Car Can I Afford With 75k Salary?

If you make $75k gross income each year and $1500 in other debt servicing costs, you could afford a monthly car payment of, at most, $750, according to the 36% rule.

Some new car models that you can afford with a 75k salary and $1500 in other debt servicing costs include:

• 2022 Buick Encore GX ($24,400, with a monthly payment of $459)

• 2022 Kia K5 ($23,790, with a monthly payment of $484)

• 2022 Hyundai Sonata ($24,150, with a monthly payment of $491)

What Car Can I Afford With 70k Salary?

With $70k gross income each year and $1500 in other debt servicing costs, you could afford a monthly car payment of, at most, $600, according to the 36% rule.

Some new car models that you can afford with a 70k salary and $1500 in other debt servicing costs include:

• 2022 Hyundai Kona ($21,300, with a monthly payment of $434)

• 2022 Mazda CX-30 ($22,200, with a monthly payment of $452)

• 2022 Kia Forte ($19,090, with a monthly payment of $389)

What Car Can I Afford With 60k Salary?

With $60k gross income each year and $1500 in other debt servicing costs, you could afford a monthly car payment of about $300, according to the 36% rule.

Some new car models that you can afford with a 60k salary and $1500 in other debt servicing costs include:

• 2022 Kia Rio ($16,150, with a monthly payment of $330)

• 2022 Hyundai Venue ($18,900, with a monthly payment of $385)

• 2022 Nissan Versa ($15,080, with a monthly payment of $309)

How Much Should I Spend On Car Payments Based On My Monthly Income?

What you spend on your car payments depends on many factors, not the least of which is your monthly income, but your ideal car payment also depends on your other outstanding debts, monthly debt servicing fees, and the period of time you want to finance your car over.

What Is An Ideal Monthly Car Payment?

Ideally, the ideal car payment would be zero, and we should all be working towards that, particularly now that we are no longer in a zero-percent interest environment.

If we need to finance a car purchase, we should aim to keep our car payments as low as possible while relying on the 36% rule, which, as stated multiple times above, is simply your gross monthly income minus other debt payments multiplied by 36%.

Financiers often use the 36% rule to calculate the upper limit a client can afford to pay monthly for a car payment.