What is the Car Affordability Calculator?
This calculator works backwards from your budget: instead of starting with a car price, you tell it the monthly payment you can comfortably afford, and it tells you the total vehicle price that payment supports. It combines your down payment with the present value of your future monthly payments, discounted at your loan's interest rate.
How to use it
Enter the monthly payment you can afford, your down payment (cash plus trade-in value), the annual interest rate (APR) your lender offers, and the loan term in months. The result shows the maximum car price, the amount you would finance, the total you would pay, and the total interest cost.
The formula explained
The financed loan amount equals the present value of an annuity: \(P \times \frac{1 - (1+r)^{-n}}{r}\), where \(P\) is the monthly payment, \(r\) is the monthly rate (APR ÷ 12 ÷ 100) and \(n\) is the number of months. Adding your down payment gives the affordable price. If the rate is 0%, the financed amount is simply payment × months.
$$\text{Price} = \text{Down} + M \cdot \frac{1 - (1+r)^{-n}}{r}$$
Worked example
Suppose you can pay $400/month for 60 months at 6% APR with $3,000 down. The monthly rate is 0.005. The factor \(\frac{1 - 1.005^{-60}}{0.005} \approx 51.7256\), so the financed amount ≈ $20,690.24. Adding $3,000 down gives an affordable price of about $23,690.24. Total paid is \(\$3{,}000 + \$24{,}000 = \$27{,}000\), so total interest ≈ $3,309.76.
FAQ
Does this include taxes and fees? No — the result is the vehicle price your payment supports. Budget separately for sales tax, registration, and dealer fees.
What APR should I use? Use the rate you have actually been quoted. Rates vary by credit score, loan term and whether the car is new or used.
Should I include my trade-in? Yes, add the trade-in value to your cash down payment for a more accurate price ceiling.
