About the Car Affordability Calculator
Dealers like to talk about the monthly payment, but the real question is how much car that payment buys and what the loan costs overall. This calculator works backwards from the monthly payment you can afford. Give it the payment, the interest rate and loan term, your down payment and trade-in value and the sales tax rate, and it tells you how much you can borrow and the most you could spend on the car, before and after tax and fees. It also shows the interest you will pay and the total cost, and compares your budget with the guideline of keeping car costs to about 10 percent of income.
Updated October 2026
How to use the Car Affordability Calculator
- 1Enter the monthly payment you can afford.
- 2Enter the loan rate and term in months.
- 3Enter your down payment and any trade-in value.
- 4Enter the sales tax and fees percentage.
- 5Read the maximum price and the loan details.
Worked example
At 450 a month over 60 months at 7 percent, the loan you can carry is about 22,726. Adding 3,000 down gives 25,726 as the most you can spend including 7 percent tax and fees, so the price of the car itself is about 24,043. Over the loan you pay about 4,274 in interest. Cutting the term to 48 months at the same payment lowers the borrowing amount to about 18,800 but saves interest.
Check the total cost of ownership before you sign. A car that costs 25,000 may cost another 8,000 to 12,000 over five years in insurance, fuel, servicing and depreciation. Electric and hybrid cars cost more up front but can cost less to run, and some places give tax credits. Use the Trip Cost Calculator for fuel, get insurance quotes for the exact model and think about how long you plan to keep the car before you decide on the loan length.
Ways to stretch your budget
- Save a larger down payment.
- Improve your credit score for a lower rate.
- Compare loans from banks, credit unions and dealers.
- Consider a certified used car.
- Negotiate the price, not the payment.
Watch out for
Adding extras to the loan, such as service plans, gap cover and add-ons, increases the amount you borrow. Check each one for value and for whether you could buy it separately. Read the loan agreement for fees, and avoid agreeing to a payment before you know the price, rate and term, since dealers can change one number to hide a change in another.
Related tools
The Auto Loan Calculator shows the payment for a car you have chosen, the Mileage Calculator and Trip Cost Calculator estimate running costs, the Budget Calculator checks your whole monthly plan and the Down Payment Calculator plans your savings.
Features
- Maximum price from a monthly payment
- Loan amount you can carry
- Price before tax and fees
- Interest and total cost
- 10% of income guide
- Any currency
Frequently asked questions
How much car can I afford?
Start with the payment you can comfortably make, including insurance and fuel. With a 450 payment, 7 percent interest over 60 months, 3,000 down and 7 percent tax, you can carry a loan of about 22,700 and spend about 25,700 out the door.
What is the 20/4/10 rule?
A guideline: put at least 20 percent down, finance for no more than 4 years, and keep total monthly car costs (loan, insurance and fuel) under 10 percent of your gross income.
Is a longer loan a good idea?
It lowers the monthly payment but raises the total interest, and you may owe more than the car is worth for longer. Loans of 72 or 84 months are common but risky. Shorter is cheaper.
Should I include insurance and running costs?
Yes. A car's cost is more than the loan: insurance, fuel, servicing, tyres, parking and depreciation all add up. A cheaper car with lower running costs may be better than a pricier one with the same payment.
Does the trade-in lower the price?
The trade-in value counts as a payment, so it raises the price you can afford for the same monthly payment. In many places it also lowers the sales tax you owe, though the calculator does not include that.
What about buying used?
Used cars cost less up front and lose value more slowly, so the same budget buys more car and a smaller loan. Check the history and condition, and get an independent inspection.