Car Affordability Calculator

Work from take-home pay, not gross. Subtract housing, utilities, food, existing debt payments, and the savings you refuse to skip, and whatever remains is the pool a car can draw from. A few benchmarks help set the ceiling before a salesperson sets it for you.

Because the calculator solves the price from a fixed payment, the rate works as a lever on the entire answer. A $500 payment over 60 months supports about $26,500 at 5 percent and about $22,500 at 12. Same monthly commitment, $4,000 apart in car. That leverage cuts both ways. Dropping your rate from 7 to 5.5 percent on a $25,000 loan saves about $1,050 over five years, so a few months spent paying card balances down and disputing report errors can buy a nicer car at the same payment. Where the quote comes from matters too. Credit unions routinely price 0.5 to 1.5 points below banks and dealer offers for the same borrower, and a pre-approval from any lender turns the rate field here from a guess into a fact. The CFPB's auto loan question bank is a good primer on what pre-approval involves and what lenders check.

The window sticker is the opening bid. At signing, documentation fees run $100 to $800 depending on the state, and title and registration add $75 to $500. Then the recurring costs start. Full coverage insurance commonly lands between $1,200 and $2,500 a year, and can pass $3,000 for a young driver or in a dense city. Tires wear out every 40,000 to 60,000 miles at $400 to $1,200 a set. Brakes need work every 30,000 to 70,000 miles at $300 to $800. Most owners also hit at least one unplanned repair a year in the $500 to $1,000 range once the warranty ends. None of that appears in the loan payment, which is why the affordable price this tool reports should leave slack in your budget rather than consume all of it.

The expensive mistakes in car budgeting happen before the test drive. Typing a hoped-for rate into a calculator like this one is the first: a two point miss shrinks your real buying power by thousands, and the discovery arrives at the worst moment, in the finance office. Stretching the term until a too-expensive car fits the payment is the second. The 72 month ceiling is about $8,900 higher than the 48 month ceiling at 6 percent, but the extra years mean more interest and a long stretch of owing more than the car is worth. The quieter mistakes involve the costs nobody quotes until late. Get an insurance estimate on the specific model before you commit, not after, because premiums vary by thousands per year between cars at the same price. Set an out-the-door ceiling in writing before you negotiate, since finance office add-ons can put $2,000 to $5,000 into the loan at signing. The FTC's consumer advice on buying and owning a car covers those add-ons and is worth reading once before any dealership visit. Underselling the trade-in belongs on this list too, because it feeds straight into the affordable price. Suppose you have $3,000 in cash and a car the dealer offers $6,000 for, while private buyers would pay $7,500. At 6 percent over 60 months with a $500 budget, the dealer offer supports a price around $32,890 and the private sale supports about $34,304. Selling the old car yourself is a weekend of hassle worth about $1,400 of vehicle in this example, and the arithmetic scales with the gap between the two offers.