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Car Loan Affordability Calculator

36 Months (3 Years) 48 Months (4 Years) 60 Months (5 Years) 72 Months (6 Years) 84 Months (7 Years)

Estimated Affordability Results

Purchase Price (Sticker Price)

$0

Total Loan Amount

$0

function calculateAffordability() { var monthly = parseFloat(document.getElementById('monthly_payment').value); var annualRate = parseFloat(document.getElementById('interest_rate').value); var months = parseInt(document.getElementById('loan_term').value); var down = parseFloat(document.getElementById('down_payment').value) || 0; var trade = parseFloat(document.getElementById('trade_in').value) || 0; var taxRate = parseFloat(document.getElementById('sales_tax').value) || 0; if (isNaN(monthly) || isNaN(annualRate) || isNaN(months) || monthly <= 0 || annualRate < 0) { alert("Please enter valid numbers for payment, rate, and term."); return; } var monthlyRate = annualRate / 100 / 12; var loanAmount = 0; if (monthlyRate === 0) { loanAmount = monthly * months; } else { // PV = P * [(1 – (1 + r)^-n) / r] loanAmount = monthly * (1 – Math.pow(1 + monthlyRate, -months)) / monthlyRate; } // Purchase Price logic: (Price + Price*Tax) – Down – Trade = Loan // Price(1 + Tax) = Loan + Down + Trade // Price = (Loan + Down + Trade) / (1 + Tax) var taxMultiplier = 1 + (taxRate / 100); var affordablePrice = (loanAmount + down + trade) / taxMultiplier; document.getElementById('sticker_price_display').innerText = "$" + affordablePrice.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('loan_amount_display').innerText = "$" + loanAmount.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('summary_text').innerText = "With a monthly budget of $" + monthly.toFixed(2) + ", you can shop for a car with a sticker price of roughly $" + affordablePrice.toLocaleString(undefined, {maximumFractionDigits: 0}) + "."; document.getElementById('results_area').style.display = 'block'; }

How to Use the Car Loan Affordability Calculator

Buying a car is one of the most significant financial decisions you'll make. Most people approach car buying backward: they find a car they love and then try to make the monthly payments fit. The Car Loan Affordability Calculator helps you flip the script. By starting with your monthly budget, you can determine the maximum "sticker price" you can actually afford before you even set foot on a dealership lot.

Key Factors That Determine Your Car Budget

Several variables impact how much car you can afford. Understanding these will help you use the calculator more effectively:

  • Monthly Payment: Financial experts often suggest that your total auto expenses (including insurance and fuel) should not exceed 15% to 20% of your take-home pay.
  • Interest Rate (APR): Your credit score heavily influences this. Higher scores typically earn lower interest rates, which increases your purchasing power for the same monthly payment.
  • Loan Term: While a 72-month or 84-month loan lowers your monthly payment, it increases the total interest paid over the life of the loan. A 60-month term is generally considered the "sweet spot" for most buyers.
  • Down Payment & Trade-In: These are your "equity." The more cash you put down or the higher your trade-in value, the more expensive a car you can buy without increasing your monthly payment.
  • Sales Tax: Don't forget that the sticker price isn't the final price. Sales tax can add thousands to the total cost, which this calculator accounts for automatically.

A Realistic Example

Imagine you have a strict budget of $500 per month. You have $4,000 saved for a down payment and an old car worth $2,500 for trade-in. If you qualify for a 5% interest rate over 60 months and your local sales tax is 7%:

The Result: You can afford a car with a sticker price of approximately $30,800. Your total loan amount would be roughly $26,450.

Tips for Getting the Best Deal

To maximize your car-buying power, consider these SEO-backed strategies:

  1. Get Pre-Approved: Visit a credit union or bank before going to the dealer. This gives you a baseline interest rate to compare against dealer financing.
  2. Shop the Total Price, Not the Payment: Dealers often focus on the monthly payment to hide the total cost. Use this calculator to know exactly what sticker price corresponds to your budget.
  3. Consider Total Cost of Ownership: Remember to budget for insurance, maintenance, and registration, which aren't included in the loan calculation.

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