How much car can I afford?
Start from the monthly payment you can manage. See the highest car price it covers for your term, rate and down payment, and how that price changes with a shorter or longer loan.
Your budget
The monthly payment you can manage, the term and the rate.
What your budget buys
Fill in your budget to see a car price
From the monthly payment, the term and the rate we work out how much you can borrow and the car price that loan covers.
- Enter the monthly payment you can manage.
- Pick a term and type the annual rate.
- Add your down payment and, if you want, trade-in, tax and fees.
A car price cannot be worked out with these numbers
Maximum car price Example
Details changed · calculate again
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- Loan amount
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- Total interest
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- Total of payments
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- Down payment
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- Trade-in
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- Sales tax (in loan)
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- Fees (in loan)
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With a 0 % rate there is no interest: the loan is the payment times the months.
Same budget, other terms
| Term | Max car price | Loan amount | Total interest |
|---|
A longer term lets the same payment cover a higher price, and it also means more total interest and more months of payments. No term is recommended here: the table only shows the trade-off.
How is it calculated?
The annual rate becomes a monthly rate r (nominal ÷ 12, or the compound equivalent of an effective rate). The amount a payment can repay over n months is the present value of those payments:
Loan = Payment × [1 − (1 + r)^−n] ÷ r (r = 0: Payment × n) The car price is then the value that leaves exactly that loan to finance:
Price + Tax × (Price − Trade-in) + Fees − Down − Trade-in = Loan Total interest is the sum of the payments minus the loan amount.
Estimates for a fixed-rate loan with equal payments at the end of each month. They do not include insurance, a balloon payment, any balance still owed on a trade-in, or lender approval. Sales tax rules vary by location. The figures are calculations, not a loan offer.
How the calculator works
Most car loan calculators go from a price to a payment. This one goes the other way: from the payment you can afford to the price that payment can pay for. It does it in two steps.
- Payment to loan. The monthly payment, the term and the monthly rate give the largest loan those payments repay in full: loan = payment × [1 − (1 + r)^−n] ÷ r. With a 0 % rate it is simply payment × months.
- Loan to price. The car price is the value that leaves exactly that loan to finance once the down payment and trade-in are subtracted and any sales tax and fees are added: price + tax × (price − trade-in) + fees − down payment − trade-in = loan.
Total interest is the sum of the payments minus the loan amount. The rate can be entered as nominal annual (divided by 12) or effective annual (converted to its compound monthly equivalent).
Worked example
Suppose you can pay $450 a month for 60 months at 7 % nominal annual, and you have $3,000 for the down payment.
- Monthly rate: 7 % ÷ 12 = 0.5833 %.
- Loan those payments repay: $22,725.90.
- Maximum car price: $22,725.90 + $3,000 = $25,725.90.
- Total of payments: $450 × 60 = $27,000.00, of which $4,274.10 is interest.
Add a $4,000 trade-in, 6 % sales tax and $500 in fees, all financed, and the maximum price becomes $27,798.02: $1,427.88 of the loan goes to tax and $500 to fees.
The same budget at each term
| Term | Max car price | Loan amount | Total interest |
|---|---|---|---|
| 36 months | $17,573.91 | $14,573.91 | $1,626.09 |
| 48 months | $21,792.09 | $18,792.09 | $2,807.91 |
| 60 months | $25,725.90 | $22,725.90 | $4,274.10 |
| 72 months | $29,394.50 | $26,394.50 | $6,005.50 |
| 84 months | $32,815.78 | $29,815.78 | $7,984.22 |
Assumptions and limits
- Fixed rate, equal payments at the end of each month, no balloon payment.
- Sales tax and fees, when entered, are included in the loan. Tax is applied to the price minus the trade-in. Many places tax a car sale this way, but not all; check the rules where you buy.
- The trade-in is treated as fully owned. If you still owe money on it, subtract that balance from its value before entering it.
- Insurance, fuel, maintenance and registration renewals are not part of the loan and are not included.
- The result is a calculation, not a loan offer. The rate you are actually offered depends on the lender.
Frequently asked questions
How do I work out how much car I can afford from a monthly payment?
Turn the payment into a loan amount with the present-value formula: loan = payment × [1 − (1 + r)^−n] ÷ r, where r is the monthly rate and n the number of months. Then add your down payment and trade-in. For example, $450 a month for 60 months at 7 % nominal annual covers a loan of $22,725.90; with $3,000 down, that is a car price of $25,725.90.
Does a longer loan term let me afford a more expensive car?
Yes, the same payment covers a larger loan over more months, but you pay more interest. At $450 a month and 7 %, the maximum price goes from $17,573.91 over 36 months to $32,815.78 over 84 months, while total interest goes from $1,626.09 to $7,984.22. Which matters more depends on your situation.
How do sales tax and fees change the price I can afford?
If they are rolled into the loan, part of the loan pays for them instead of the car, so the price you can afford goes down. In the example with a $4,000 trade-in, the price is $29,725.90 without tax or fees and $27,798.02 with 6 % sales tax and $500 in fees. This calculator applies the tax to the price minus the trade-in; the rules vary by state and country.
What is the 20/4/10 rule for buying a car?
It is a commonly cited rule of thumb: put at least 20 % down, finance for no more than 4 years, and keep car costs under 10 % of your income. It is a guideline some people use, not a requirement from lenders, and this calculator does not apply it. You can see what a 48-month term would mean for your budget in the table of terms.
Is the result the amount a lender will approve?
No. The calculator only does the math from the numbers you enter. Whether a lender approves a loan, and at what rate, depends on the lender and on your own circumstances. Use the rate from an actual offer to get a figure that reflects it.