Understanding the Edmunds Car Affordability Calculator
The Edmunds Car Affordability Calculator is a powerful tool designed to help prospective car buyers understand the true cost of vehicle ownership beyond just the sticker price. It takes into account not only the financing of the car but also ongoing expenses like fuel and maintenance, providing a more holistic picture of what you can realistically afford. This calculator helps you make a more informed decision by estimating your total monthly outlay for a vehicle.
How the Calculation Works
The calculator breaks down the total monthly cost into several key components:
Monthly Loan Payment: This is calculated based on the car's price, your down payment, the loan term (in years), and the annual interest rate. The standard monthly loan payment formula (for an amortizing loan) is used.
Estimated Monthly Fuel Cost: This is derived from your estimated monthly mileage, the vehicle's miles per gallon (MPG), and the average price of gas per gallon.
Estimated Monthly Maintenance & Repairs: While not directly input into this simplified calculator, a professional calculator like Edmunds' often includes an estimation for these costs based on vehicle type, age, and expected mileage. For this example, we focus on loan and fuel to demonstrate the core mechanics.
The Math Behind the Monthly Loan Payment:
The monthly payment (M) for a loan is calculated using the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (Car Price – Down Payment)
n = Total number of payments (Loan Term in Years * 12)
The Math Behind the Monthly Fuel Cost:
The monthly fuel cost is calculated as:
Monthly Fuel Cost = (Monthly Mileage / MPG) * Gas Price per Gallon
Why Use This Calculator?
Buying a car is a significant financial commitment. Using an affordability calculator like this helps you:
Avoid Overspending: Prevent yourself from committing to a car payment and associated costs that strain your budget.
Budget Effectively: Understand all the financial implications of car ownership, including ongoing running costs.
Compare Vehicles: Evaluate different car options based on their total estimated monthly expenses, not just their purchase price.
Negotiate Smarter: Knowing your affordable range empowers you during price negotiations.
This calculator provides an estimate. Actual costs can vary based on specific loan terms offered by lenders, insurance premiums, registration fees, taxes, and unexpected repair costs. It's always recommended to get pre-approved for financing and consult with a financial advisor for personalized advice.
function calculateAffordability() {
var carPrice = parseFloat(document.getElementById("carPrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var monthlyMileage = parseFloat(document.getElementById("monthlyMileage").value);
var mpg = parseFloat(document.getElementById("mpg").value);
var gasPrice = parseFloat(document.getElementById("gasPrice").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Validate inputs
if (isNaN(carPrice) || carPrice <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(monthlyMileage) || monthlyMileage < 0 ||
isNaN(mpg) || mpg <= 0 ||
isNaN(gasPrice) || gasPrice carPrice) {
resultDiv.innerHTML = "Down payment cannot be greater than the car price.";
return;
}
// Calculate Principal Loan Amount
var principal = carPrice – downPayment;
// Calculate Monthly Loan Payment
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyLoanPayment = 0;
if (monthlyInterestRate > 0) {
monthlyLoanPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle 0 interest rate case
monthlyLoanPayment = principal / numberOfPayments;
}
// Calculate Estimated Monthly Fuel Cost
var monthlyFuelCost = (monthlyMileage / mpg) * gasPrice;
// Calculate Total Estimated Monthly Cost
var totalMonthlyCost = monthlyLoanPayment + monthlyFuelCost;
// Display results
resultDiv.innerHTML =
"Total Estimated Monthly Cost: $" + totalMonthlyCost.toFixed(2) + "" +
"" +
"(Monthly Loan Payment: $" + monthlyLoanPayment.toFixed(2) + " + Monthly Fuel Cost: $" + monthlyFuelCost.toFixed(2) + ")" +
"";
}