Car Affordability Calculator

How to Use the Car Affordability Calculator

1. Enter the monthly payment amount that you can afford.
2. Enter your available down payment.
3. Enter your current car trade in value.
4. Enter the interest rate you will be offered on your auto loan (%).
5. Enter the term of your loan (years/months) :

How Car Affordability is Calculated

• Maximum Car Value: The highest value of car you can afford without overspending.
• Loan Amount: The amount of financing you require to purchase the car.
• Interest Paid: The total interest charges over the life of the loan.
• Monthly Payment: The periodic fixed payment including both principal and interest.

Tips for Car Shopping

• Remember to include taxes, registration, and other fees as part of the total cost.
• Consider the total cost of car ownership, not just the sticker price.
• Shop around for the best interest rates and terms from multiple lenders.
• Negotiate the price of the car separately from the financing terms.
• Keep your loan term as short as possible to minimize interest charges.
• Put down at least 20% of the car value to avoid being upside down on your loan.

Understanding Auto Loans

An auto loan is a secured loan that is used to purchase a car. The car you buy is used as collateral for the loan. A lender will extend credit to you to buy the car and you will repay the loan over time with interest. Your monthly payment is determined using an amortization formula which guarantees that the loan is fully repaid by the end of the term.

The following are the important factors that affect your car affordability.

• Monthly Payment: The monthly payment that you can afford.
• Down Payment: The amount of cash you can afford to put towards the purchase.
• Trade-in Value: The amount you can trade in your current car for.
• Interest Rate: The cost of credit expressed as a percentage.
• Loan Term: The length of time over which the loan is repaid.