Use the free Car Affordability Calculator on ToolVexa to estimate how much car you can afford when your monthly car payment is kept to 15% of your monthly income.
How to Use
Enter your monthly income, your down payment, the annual interest rate and the loan term in years. Then press Calculate. The result shows the affordable monthly payment, the maximum loan that payment supports, and the total affordable car price including your down payment.
Formula in Plain Words
The affordable monthly payment is 15% of monthly income. The maximum loan is that payment multiplied by the loan factor, which is (1 minus (1 plus the monthly rate) to the power of minus the number of months) divided by the monthly rate. Add the down payment to the maximum loan to get the affordable car price.
Worked Example
For a monthly income of $4,000, a down payment of $5,000, an annual rate of 6% and a 5-year term, the affordable monthly payment is $600 and the affordable car price is about $36,036.
FAQs
Why 15% of income?
15% is a common budgeting guide for a car payment, leaving room for fuel, insurance, tax and running costs.
Does this include insurance and fuel?
No. This calculator estimates the car price only, so allow extra room in your budget for insurance, fuel and maintenance.
What if I have no down payment?
Enter 0 for the down payment. The affordable price will then equal the maximum loan alone.