.calculator-container {
font-family: sans-serif;
border: 1px solid #ccc;
padding: 20px;
border-radius: 8px;
max-width: 500px;
margin: 20px auto;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-inputs {
display: grid;
grid-template-columns: 1fr;
gap: 15px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.calculator-container button {
display: block;
width: 100%;
padding: 12px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
margin-top: 20px;
transition: background-color 0.3s ease;
}
.calculator-container button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ddd;
border-radius: 5px;
text-align: center;
font-size: 1.1rem;
color: #333;
}
.calculator-result strong {
color: #007bff;
}
function calculateLoanAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebtPayments = parseFloat(document.getElementById("existingDebtPayments").value);
var desiredLoanTermMonths = parseInt(document.getElementById("desiredLoanTermMonths").value);
var estimatedAPR = parseFloat(document.getElementById("estimatedAPR").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(monthlyIncome) || isNaN(existingDebtPayments) || isNaN(desiredLoanTermMonths) || isNaN(estimatedAPR)) {
resultDiv.innerHTML = "Error: Please enter valid numbers for all fields.";
return;
}
if (monthlyIncome <= 0 || existingDebtPayments < 0 || desiredLoanTermMonths <= 0 || estimatedAPR < 0) {
resultDiv.innerHTML = "Error: Please enter positive values where applicable.";
return;
}
// General guideline: Debt-to-Income Ratio (DTI) of 43% is often a common threshold for lenders.
// We will calculate the maximum total monthly debt (including the new loan payment)
// that fits within a certain DTI, for example, 40% for a more conservative estimate.
var maxTotalDebtPercentage = 0.40; // 40% DTI for new loan calculation
var maxTotalMonthlyDebt = monthlyIncome * maxTotalDebtPercentage;
var maxNewLoanPayment = maxTotalMonthlyDebt – existingDebtPayments;
if (maxNewLoanPayment 0) {
var numerator = Math.pow(1 + monthlyInterestRate, desiredLoanTermMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, desiredLoanTermMonths);
maxLoanAmount = maxNewLoanPayment * (numerator / denominator);
} else {
// If interest rate is 0, the loan amount is simply maxNewLoanPayment * desiredLoanTermMonths
maxLoanAmount = maxNewLoanPayment * desiredLoanTermMonths;
}
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxNewLoanPayment = maxNewLoanPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Based on your inputs, your estimated maximum affordable loan amount is: " + formattedMaxLoanAmount + "." +
"This assumes a maximum total monthly debt payment (including this new loan) of " + (maxTotalDebtPercentage * 100) + "% of your net monthly income, " +
"resulting in a maximum monthly payment for this new loan of approximately " + formattedMaxNewLoanPayment + " over " + desiredLoanTermMonths + " months at an estimated " + estimatedAPR + "% APR.";
}
Understanding Personal Loan Affordability
Taking out a personal loan can be a significant financial decision. Before you apply, it's crucial to understand how much you can realistically afford to borrow and repay each month. This calculator is designed to help you estimate your borrowing capacity based on your income, existing financial obligations, and desired loan terms.
Key Factors Explained:
Monthly Net Income: This is the amount of money you take home after taxes and other deductions. Lenders look at this figure to determine your ability to handle new debt.
Existing Monthly Debt Payments: This includes payments for other loans (car loans, student loans), credit card minimum payments, and any other recurring debt obligations. These payments reduce the amount of income available for a new loan.
Desired Loan Term (in Months): The period over which you plan to repay the loan. A longer term typically means lower monthly payments but higher total interest paid.
Estimated Annual Percentage Rate (APR): This is the annual cost of borrowing, expressed as a percentage. It includes the interest rate and any associated fees. A lower APR means a cheaper loan.
How the Calculator Works:
This calculator uses a common lending guideline related to the Debt-to-Income Ratio (DTI). The DTI is a measure of how much of your monthly income goes towards paying off debts. While lenders have varying DTI thresholds, a DTI of 43% is often cited as a maximum for many types of loans. For personal loan affordability, this calculator uses a more conservative approach, calculating the maximum loan amount that keeps your total monthly debt payments (including the new loan) at or below a certain percentage (defaulting to 40%) of your net monthly income.
It first determines the maximum total monthly debt payment you can afford. Then, it subtracts your existing debt payments to find out how much room you have for a new loan payment. Finally, using the loan payment formula, it calculates the principal loan amount you could borrow based on that maximum affordable monthly payment, your desired loan term, and the estimated APR.
Maximum total monthly debt (at 40% DTI): $5,000 * 0.40 = $2,000
Maximum affordable payment for the new loan: $2,000 – $1,200 = $800
Based on an $800 monthly payment over 60 months at 10% APR, the calculator estimates you could afford a personal loan of approximately $38,177.
This means that if you borrowed $38,177 at 10% APR for 60 months, your monthly payment would be around $800, bringing your total monthly debt obligations to $1,200 (existing) + $800 (new loan) = $2,000, which is 40% of your $5,000 net monthly income.
Disclaimer: This calculator provides an estimate based on common financial guidelines. Actual loan approval amounts and terms will vary depending on the lender's specific criteria, your creditworthiness, and other financial factors. It is always recommended to consult with a financial advisor and compare offers from multiple lenders.