How Much Car You Can Actually Afford on a $75,000 Income in 2026

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Buying a new car in 2026 is not a task to take lightly. While many Americans may feel that a $75,000 income should be enough to purchase a new car, the reality shows otherwise.

The average price of a new car is $50,326, as of December 2025, according to Kelley Blue Book (KBB). Here’s how to identify what you can buy on a $75,000 income.

Start With a Guardrail

Personal finance is full of helpful formulas to guide spending. The 20/4/10 rule is a traditional guardrail Americans have used for years to guide a car purchase.

Here’s how the 20/4/10 rule works:

• Make a 20% down payment
• Keep the auto loan term to no more than four years
• Total transportation costs are not to exceed 10% of your gross monthly income

With car prices ballooning, it’s a challenge for many Americans to stay within the guardrail. Often, Americans end up with longer car loans to fit payments into their budgets, but that doesn’t make the car more affordable. Regardless of what formula you use, having a guardrail is beneficial.

Do the Math

Knowing the math behind a car purchase can help Americans make an informed purchase that doesn’t exceed their budgets. With a $75,000 annual income, that equates to $6,250 a monthly.

Following the 20/4/10 model, you should spend a max of $625 monthly on transportation costs. If you want a more conservative approach, you can use 8% of your income, reducing the total to $500 per month.

Remember, this includes insurance, fuel and maintenance. Rates vary by state of residence, but assuming you spend at least $300 on these non-loan costs, they can significantly impact what you can justifiably purchase. At $300 per month in non-loan costs, you will want to keep your monthly car payment to $325 or less.

Again, non-loan costs can vary widely, so you may be able to reasonably handle a $400 or $500 monthly car payment. At $500, financed over 48 months with 20% down at the average new-car annual percentage rate (APR) of 6.5%, that equates to a $26,400 car before taxes and fees.

Trying to stay to a $400 monthly payment results in a $16,900 car before taxes and fees. Using a car affordability calculator can provide a general range of what to expect based on where you live.

What Are Most Americans Paying?

Monthly car payments remain a pain point for many Americans. Loan payments continue to grow, with the average new car payment reaching $772 in Q4 2025, per Edmunds. Worse yet, 20% of new car buyers have monthly payments over $1,000, per Edmunds.

While it’s possible to qualify for payments near such averages, it doesn’t mean that it’s sustainable. On a $75,000 annual income, high payments make it exceedingly difficult to achieve financial goals, avoid debt, grow savings and more. It’s best to look for ways to purchase a car without sacrificing those goals.

What Cars Might Fit Your Budget

It is possible to find an affordable car that won’t derail your budget on a $75,000 income, but it requires homework. In most cases, a new compact car or sedan will fit best.

Popular examples include:

• Toyota Corolla, starting at $22,295
• Nissan Sentra, starting at $22,600
• Chevrolet Trax, starting at $21,700
• Honda Civic Sedan, starting at $24,695
• Mazda3 Sedan, starting at $24,550

Trims, destination charges, taxes and dealer fees all impact the cost to walk out the door, so prices may vary.

Using a conservative formula, with $75,000 in income, it’s prudent to keep total transportation costs around $625 per month, then back into your payment the true non-loan costs. Realistically, for many buyers, that will result in a car that’s in the low to mid-$20,000s. Having a solid down payment and good credit score can drive that amount higher.

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