Car Affordability Calculator: How Much Car Can I Afford?

When you make a payment, part of your money goes to interest and part to principal. In the beginning of the loan, most of the money is placed on interest. With long term loans it takes a much longer time for more of your money to be placed on principal, therefore delaying the amount of equity you build. If you decide to sell your car, you may owe more on it than the equity in it, thus being “up-side-down”. Putting down a larger down payment can help to avoid this situation. Another way to reduce your total car payment is to bring a vehicle to trade in at the dealership. Although you might not get as much in trade-in value as you would selling the car privately, a trade-in can reduce the total amount you borrow from the lender.

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Most third-party loan providers require higher returns on their money than traditional lenders like banks Car Affordability Calculator: How Much Car Can I Afford? or dealerships. The total loan amount you calculated for your car may not be the price you pay.

Pros and cons of leasing vs. buying a car

Remember the rule of one-third when establishing this value, which we presented in the previous section. No matter your current financial situation, our car affordability calculator will help you figure out what the maximum price of your new car could be without too much difficulty.

How much should I spend on a car if I make $60,000?

If your take-home pay is $60,000 per year, you should pay no more than $750 per month for a car, which totals 15% of your monthly take-home pay.

A shorter loan term means bigger payments but less interest paid overall. So, while a long loan term can be tempting, it may be better to go with a less expensive vehicle to keep payments affordable. Now that you have a sense of your budget, you can compare whether the car you’ve been eyeing is within reach — and whether you’ll need financing. Following these steps can help determine the affordability of a specific vehicle or loan. Two of the largest additional costs that come with car ownership are fuel and insurance costs. You can use to search for mileage estimates for your car of choice.

Online Banking

Get a few car insurance quotes and use a cost-to-own tool to see estimates of what you might pay. Even if you have the cash available to pay for your car outright, you should still consider your purchase in the full context of your annual salary and expenses. Specifically, weigh buying in cash — and possibly eating into or wiping out your emergency fund — versus making affordable payments over time. This calculator will help you to figure how much car you can afford. To help you see current market conditions and find a local lender current local auto loan rates are published in a table below the calculator. Shopping around with auto loan providers can help you get lower interest rates. Most banks, dealerships and third-party loan providers will give you free quotes.

Car Affordability Calculator: How Much Car Can I Afford?