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.
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.
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.
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.
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.
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).
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.