Car Affordability Calculator
Find out how much car you can realistically afford: enter your monthly income, down payment, loan rate, term, and running costs to get the maximum car price, monthly payment and total interest paid.
%
months
Car budget as % of monthly income
Based on your income, budget rule, down payment and running costs
15,650
Max priceDown payment
17.2%
Loan principal
72.7%
Total interest
10.1%
- 1
Monthly car budget
4,000 × 15% = 600 - 2
Budget for loan payment
600 − 120 − 180 = 300 - 3
Loan present-value factor
(1 − (1 + 0.005417)⁻ⁿ) ÷ 0.005417 = 42.1675Converts a monthly payment into the loan amount it can fully repay. - 4
Maximum loan
300 × 42.1675 = 12,650 - 5
Maximum car price
12,650 + 3,000 = 15,650
How does this calculator work?
Car affordability is driven by the 15%-of-income rule: budget 15% of monthly gross income for all car costs, subtract insurance and fuel/maintenance, then use the remainder as your loan payment ceiling. The loan formula converts that into a maximum car price after adding your down payment.
Formula
How this is calculated
The most widely used guideline for car buying is to keep total monthly car expenses — loan payment, insurance, fuel, and maintenance — below 15% of your monthly gross income. This calculator applies that rule (adjustable from 10–25%) to work backwards from your budget to the maximum car price you can support.
First, it subtracts your monthly insurance and running costs from the total budget to find what remains for loan repayments. It then uses the standard present-value loan formula to convert that monthly payment capacity into a maximum loan amount, given your interest rate and chosen term. Adding your down payment gives the maximum car price.
For reference, longer loan terms lower the monthly payment but increase total interest paid. The loan balance chart shows how the principal falls over the term — early payments are mostly interest; only later does the balance drop quickly. A larger down payment reduces both the loan size and interest, often more effectively than stretching the term. Note that this calculator uses gross income; after tax, health cover, and other fixed costs, the real spare cash available may be less than the percentage suggests.
Frequently asked questions
A common guideline is the "20/4/10" rule: put at least 20% down, finance for no more than 4 years, and keep all car expenses below 10% of gross income. A 15% ceiling is more forgiving and widely used in practice, especially where public transport is limited.
Longer terms reduce the monthly payment but significantly increase total interest paid. A 72-month loan at 6.5% costs roughly 50% more in interest than a 36-month loan on the same principal. The calculator shows the loan balance chart so you can see the trade-off clearly.
Yes — the trade-in value a dealer credits toward your new car reduces what you need to borrow exactly like a cash down payment. Enter it in the down payment field.
Also known as
TG we-Calculate Editorial Team. (2026). Car Affordability Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/car-affordability-calculator
TG we-Calculate Editorial Team. "Car Affordability Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/car-affordability-calculator.
TG we-Calculate Editorial Team, "Car Affordability Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/car-affordability-calculator
@misc{wecalculate_car_affordability_calculator, title = {Car Affordability Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/car-affordability-calculator}}, year = {2026}, note = {TG we-Calculate} }
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