Car Affordability Calculator
Estimate the maximum car price you can afford from your monthly payment budget, down payment, trade-in, loan rate, and term.
How to use this tool
- Enter the monthly payment you can comfortably afford.
- Add your planned down payment and any trade-in value.
- Enter the loan's APR and term in months.
- Optionally enter a sales-tax rate to fit tax inside the budget.
- Read the maximum car price, loan amount, and total purchasing power.
Find a realistic car-shopping budget. This calculator turns your monthly payment, down payment, and trade-in into a maximum car price given your loan rate and term.
Formula
The financed amount your budget supports is the present value of the monthly payment stream:
Max loan = Budget × [ 1 − (1 + r)−n ] ÷ r
where r is the monthly rate (APR ÷ 12) and n the term in months. Add your cash and trade-in for total purchasing power:
Total = Max loan + Down payment + Trade-in
If a sales-tax rate is supplied, the sticker price is grossed down so tax fits inside the total:
Max price = Total ÷ (1 + Tax%)
How it works
Most buyers shop by monthly payment, but the payment alone hides the true price you can afford. This calculator inverts the loan math: it converts the monthly payment you can comfortably carry into the largest loan principal that payment will service over your chosen rate and term, using the present-value-of-an-annuity formula.
Cash down and any trade-in equity stack on top of the financed amount, because they reduce what you need to borrow dollar-for-dollar. When you supply a sales-tax rate, the tool grosses the sticker price down so that tax is paid out of the same pool of money — otherwise you'd be quoted a price you couldn't actually drive off the lot.
Treat the result as an upper bound on sticker price, not a target. It excludes registration, title, dealer fees, insurance, and fuel, all of which compete for the same budget. A common guideline is to keep total monthly vehicle costs under about 15-20% of take-home pay and to favor shorter terms, which cost far less interest even though the monthly payment is higher.
Worked example
$500/mo budget, $3,000 down, $2,000 trade, 0% APR, 60 months
- With a 0% APR the loan is simply Budget × months = $500 × 60 = $30,000.
- Total purchasing power = $30,000 loan + $3,000 down + $2,000 trade = $35,000.
- No sales tax entered, so the maximum car price equals the total = $35,000.
Max car price $35,000.00 | Max loan $30,000.00 | Total purchasing power $35,000.00
Common mistakes to avoid
- Using gross income to set the monthly payment budget instead of take-home pay -- lenders qualify on gross income, but you pay bills from net income.
- Forgetting tax, title, and dealer fees that can add $1,000-$3,000 to the purchase price, reducing the vehicle price the budget can actually support.
- Ignoring insurance, fuel, and maintenance costs when setting the monthly payment budget, leaving no room for operating expenses.
Maximum amount financed by monthly payment and APR (60-month term)
| Monthly payment | At 5% APR | At 7% APR | At 9% APR |
|---|---|---|---|
| $300 | $15,897 | $15,151 | $14,452 |
| $400 | $21,196 | $20,201 | $19,269 |
| $500 | $26,495 | $25,251 | $24,087 |
| $600 | $31,794 | $30,301 | $28,904 |
| $700 | $37,093 | $35,351 | $33,721 |
Key terms
- APR (annual percentage rate)
- The yearly cost of an auto loan including interest, expressed as a percentage. Divided by 12 it gives the monthly rate used in payment math.
- Amount financed
- The loan principal — the portion of the car price you borrow after down payment and trade-in.
- Trade-in equity
- Your current vehicle's value minus any loan still owed on it; positive equity reduces the new loan.
- Present value of an annuity
- The math that converts a stream of equal monthly payments into the single loan amount they can support today at a given rate.
Frequently asked questions
- How much car can I afford on my salary?
- A common rule is to keep total monthly vehicle costs (payment plus insurance and fuel) under about 15-20% of your take-home pay, and to finance for no more than 60 months. This tool works from the monthly payment you set rather than a flat salary multiple.
- Should I choose a longer loan to afford more car?
- A longer term lowers the monthly payment but raises total interest and keeps you 'underwater' longer. It's usually better to buy a cheaper car than to stretch a 72- or 84-month loan.
- Does this include taxes and fees?
- Only if you enter a sales-tax rate. Registration, title, documentation, and dealer fees are not included, so leave a cushion below the maximum price.