Car Affordability Calculator
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What Your Result Means
- Max monthly payment: The most you should spend on a car payment each month, based on 15% of your gross income minus existing monthly debt obligations. This is a widely-cited budgeting guideline, not a lending limit.
- Max car price: The highest purchase price the tool estimates you can afford, calculated by back-solving the loan formula from your max payment, then adding your down payment.
- Loan amount: The financed portion — max car price minus down payment. This is what you would actually borrow.
- Total interest paid: The cumulative interest over the life of the loan at the entered rate and term. Longer terms and higher rates increase this number significantly.
- Total cost of car: Down payment plus all monthly payments over the loan term. This is the real out-of-pocket price of the vehicle.
How This Calculator Works
You enter your gross monthly income, existing monthly debts, down payment, loan term in months, and annual interest rate. The tool takes 15% of gross income as the maximum car-related payment, subtracts your other debts, then back-solves the standard amortization formula to find the largest loan that payment can support. It adds the down payment to get a total purchase price and reports interest and total cost. It does not include insurance, fuel, maintenance, or registration — budget those separately.
Quick Questions
Why 15% of income?
The 15% rule is a common personal-finance guideline that keeps total transportation spending manageable relative to income. Some advisors suggest 10–15% of take-home pay instead. Lenders may approve higher amounts, but that does not mean you should borrow that much.
Should I use gross or net income?
This calculator uses gross (pre-tax) income, which is the more common convention for the 15% rule. If you prefer a more conservative estimate, enter your net (after-tax) income instead — the tool works the same either way.
Does this include insurance and gas?
No. This calculator covers the loan payment only. Insurance, fuel, maintenance, and registration typically add another 5–10% of income. Make sure your total transportation budget fits comfortably within your monthly cash flow.
Is a longer loan term better?
Longer terms lower the monthly payment but increase total interest significantly. A 72-month loan at 6.5% costs substantially more in interest than a 48-month loan at the same rate. Generally, 48–60 months is a reasonable range for new cars.
How much down payment should I put?
A common guideline is 20% of the purchase price. A larger down payment reduces the loan amount, lowers monthly payments, and may qualify you for a better interest rate. It also helps avoid being "upside down" on the loan (owing more than the car is worth).
Sources
- Consumer Financial Protection Bureau — Auto Loans (auto lending guidance and borrower rights)
- Federal Trade Commission — Auto Loans (consumer protection and shopping tips)
- NerdWallet — How Much to Spend on a Car (15% rule explanation and alternatives)
Method & review
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.