Determine the vehicle price you can afford based on your ideal monthly payment.
Estimated Max Vehicle Price
$0.00
How Much Car Can I Honestly Afford?
When shopping for a new or used vehicle, most buyers make the mistake of looking at the sticker price first. However, the most accurate way to budget for a vehicle is by calculating affordability based on your monthly cash flow. Our Car Loan Affordability Calculator helps you reverse-engineer the math to find a purchase price that fits your life.
Understanding the 20/4/10 Rule
Financial experts often recommend the 20/4/10 rule for auto financing to ensure you don't become "car poor":
20% Down: Aim to put at least 20% down to avoid "gap" issues where you owe more than the car is worth.
4 Years: Limit the loan term to 48 months (4 years) to minimize interest costs.
10% Income: Ensure your total transportation costs (loan, insurance, fuel) don't exceed 10% of your gross monthly income.
Factors That Affect Your Buying Power
Three main components dictate how much car you can get for your money:
Interest Rate (APR): Your credit score is the primary driver here. A lower score leads to a higher rate, which significantly reduces the loan amount you can afford for the same monthly payment.
Loan Term: While an 84-month loan makes the monthly payment smaller, it increases the total interest paid and keeps you in debt longer.
Sales Tax & Fees: Remember that the "out the door" price includes state taxes, registration fees, and dealer documentation fees. Our calculator factors in sales tax to give you a more realistic purchase price.
Example Calculation
If you want to spend $500 per month for 60 months at a 6% interest rate, and you have $5,000 for a down payment (including trade-in), you could afford a vehicle priced at approximately $28,500 (depending on your local sales tax rate).
function calculateAffordability() {
var monthlyPayment = parseFloat(document.getElementById("monthlyPayment").value);
var annualRate = parseFloat(document.getElementById("interestRate").value);
var months = parseInt(document.getElementById("loanTerm").value);
var downPayment = parseFloat(document.getElementById("downPayment").value) || 0;
var tradeIn = parseFloat(document.getElementById("tradeIn").value) || 0;
var taxRate = parseFloat(document.getElementById("salesTax").value) || 0;
if (isNaN(monthlyPayment) || isNaN(annualRate) || isNaN(months) || monthlyPayment <= 0 || months <= 0) {
alert("Please enter valid positive numbers for payment, rate, and term.");
return;
}
// Monthly interest rate
var r = (annualRate / 100) / 12;
var loanAmount = 0;
if (r === 0) {
loanAmount = monthlyPayment * months;
} else {
// Formula for present value of an annuity: P = M * [1 – (1+r)^-n] / r
loanAmount = monthlyPayment * (1 – Math.pow(1 + r, -months)) / r;
}
// Total cash available for purchase (Down payment + Trade-in)
var totalDown = downPayment + tradeIn;
// The loan covers the (Vehicle Price + Tax) – Down Payment
// Loan = (Price * (1 + taxRate)) – Down
// Loan + Down = Price * (1 + taxRate)
// Price = (Loan + Down) / (1 + taxRate)
var decimalTax = taxRate / 100;
var maxVehiclePrice = (loanAmount + totalDown) / (1 + decimalTax);
var totalInterest = (monthlyPayment * months) – loanAmount;
// Display Results
document.getElementById("totalPriceResult").innerText = "$" + maxVehiclePrice.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var breakdownDiv = document.getElementById("breakdownText");
breakdownDiv.innerHTML =
"Total Loan Amount: $" + loanAmount.toLocaleString(undefined, {maximumFractionDigits: 0}) + "" +
"Estimated Sales Tax: $" + (maxVehiclePrice * decimalTax).toLocaleString(undefined, {maximumFractionDigits: 0}) + "" +
"Total Interest Paid over " + months + " months: $" + totalInterest.toLocaleString(undefined, {maximumFractionDigits: 0});
document.getElementById("resultArea").style.display = "block";
}