Vehicle Affordability Calculator

This inverts the standard car-loan formula: instead of solving for a payment from a price, it solves for the price a fixed payment can support.

• Monthly rate r = APR ÷ 100 ÷ 12, payments n = term in months
• Maximum financed = budget × (1 − (1 + r)^−n) ÷ r; at 0% APR it is budget × n
• Out-the-door price supported = maximum financed + down payment + trade-in
• Maximum vehicle price = (out-the-door price + trade-in × tax rate) ÷ (1 + tax rate), since tax applies to price minus trade-in

A $450 monthly budget at 6.5% APR over 60 months, with $2,000 down, a $3,000 trade-in, and 7% sales tax.

1. 1Monthly rate = 6.5 ÷ 1200 = 0.00541667 over 60 payments.
2. 2Maximum financed = $450 × (1 − 1.00541667^−60) ÷ 0.00541667 ≈ $22,999.
3. 3Out-the-door price supported = $22,999 + $2,000 + $3,000 = $27,999.
4. 4Maximum vehicle price = ($27,999 + $3,000 × 0.07) ÷ 1.07 ≈ $26,363.
5. 5Total interest over 60 months = $450 × 60 − $22,999 ≈ $4,001.
6. 6At $4,500 take-home pay, $450 is 10% of income — under the 15% target.

Why isn't the maximum price just the payment times the term?

Because part of every payment is interest, not principal, so a payment supports less financing than its simple multiple. Tax and your trade-in and down payment then adjust the sticker price the financed amount can reach.

How is sales tax handled?

It is applied to the vehicle price minus the trade-in, matching the convention used by most US states and by the auto loan calculator on this site.

What share of income should a car payment be?

A common guideline is 10%–15% of take-home pay for the payment alone, and 15%–20% for total vehicle costs including insurance, fuel, and maintenance. Treat this as a starting point, not a rule.

Does a longer term let me afford a more expensive car?

Yes, for a given payment a longer term supports more financing, but it also means more total interest and a longer stretch where you could owe more than the car is worth.

Should I include insurance and fuel in my budget number?

No — this calculator solves for the loan payment only. Add insurance, fuel, and maintenance separately when deciding what monthly payment you can actually afford.