Determine the maximum vehicle price based on your monthly budget.
Estimated Max Vehicle Price
$0.00
How Much Car Can You Really Afford?
Buying a car is one of the most significant financial decisions you'll make. Most people focus on the sticker price of the vehicle, but the most important number is actually the total loan amount you can support with your monthly income. Our Car Loan Affordability Calculator helps you reverse-engineer the math to find your target purchase price.
Understanding the Factors of Car Affordability
Monthly Payment: Financial experts often recommend the 10% rule, where your total car-related expenses (including insurance and gas) shouldn't exceed 10% of your gross monthly income.
Loan Term: While a 72-month or 84-month loan lowers your monthly payment, it significantly increases the total interest paid and increases the risk of being "underwater" (owing more than the car is worth).
Interest Rate (APR): Your credit score is the primary driver here. Even a 1% difference in interest can change your buying power by thousands of dollars.
Down Payment & Trade-in: These are your "equity" in the deal. The more you put down upfront, the higher the vehicle price you can afford for the same monthly payment.
Example Calculation Breakdown
Let's say you have a strict budget of $500 per month. If you secure a 60-month loan at 5% interest, the bank will lend you approximately $26,500. If you have a $3,000 down payment and a $2,000 trade-in, your total purchasing power increases to $31,500. However, you must account for sales tax; at a 6% tax rate, your maximum vehicle sticker price would be roughly $29,716.
The 20/4/10 Rule for Smart Financing
If you want to stay financially healthy, many advisors suggest the 20/4/10 rule:
Put down at least 20% of the purchase price.
Finance the car for no more than 4 years (48 months).
Keep total monthly vehicle costs under 10% of your take-home pay.
function calculateAffordability() {
var monthlyBudget = parseFloat(document.getElementById('monthlyBudget').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var tradeIn = parseFloat(document.getElementById('tradeIn').value) || 0;
var salesTax = parseFloat(document.getElementById('salesTax').value) || 0;
if (isNaN(monthlyBudget) || isNaN(loanTerm) || isNaN(interestRate) || monthlyBudget <= 0 || loanTerm <= 0) {
alert("Please enter valid numbers for budget, term, and interest rate.");
return;
}
var monthlyRate = (interestRate / 100) / 12;
var loanAmount = 0;
if (monthlyRate === 0) {
loanAmount = monthlyBudget * loanTerm;
} else {
// Formula for present value of an annuity: P = PMT * [(1 – (1+r)^-n) / r]
loanAmount = monthlyBudget * (1 – Math.pow(1 + monthlyRate, -loanTerm)) / monthlyRate;
}
// Total cash available for purchase (Loan + Down + Trade)
var totalAvailable = loanAmount + downPayment + tradeIn;
// Adjust for sales tax: Price * (1 + Tax) = Total Available
// Therefore: Price = Total Available / (1 + Tax)
var maxVehiclePrice = totalAvailable / (1 + (salesTax / 100));
var taxAmount = maxVehiclePrice * (salesTax / 100);
// Update UI
var resultDiv = document.getElementById('affordabilityResult');
var maxPriceDisplay = document.getElementById('maxPriceDisplay');
var detailBreakdown = document.getElementById('detailBreakdown');
maxPriceDisplay.innerHTML = "$" + maxVehiclePrice.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
detailBreakdown.innerHTML = "Total Loan Amount: $" + loanAmount.toLocaleString(undefined, {maximumFractionDigits: 0}) + "" +
"Estimated Sales Tax: $" + taxAmount.toLocaleString(undefined, {maximumFractionDigits: 0}) + "" +
"Total Interest over " + loanTerm + " months: $" + ((monthlyBudget * loanTerm) – loanAmount).toLocaleString(undefined, {maximumFractionDigits: 0});
resultDiv.style.display = "block";
resultDiv.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}