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Car Affordability Calculator

Turn your monthly budget into a car price you can shop for.

How it is calculated

The tool runs the loan formula backwards. With a monthly payment B, a monthly rate r and n monthly payments, the largest amount you can borrow is B × (1 − (1 + r)−n) ÷ r. The monthly rate is the annual percentage rate divided by 1200. If the rate is left empty or is 0, the price is simply B × n.

Budget is dollars per month and must be above zero; the term is in months. The "total paid" line is just B × n, the sum of all payments. Note that the result is the loan size, which equals the car price only if you pay nothing up front: the tool has no down payment, trade-in, tax or fee field, so add your cash down payment to the maximum price yourself and keep taxes and fees out of the payment budget.

Worked example

Suppose you can pay $450 a month for 60 months at 6.9% a year. The monthly rate is 6.9 ÷ 1200 = 0.00575. The discount factor (1.00575)−60 is about 0.7089, so (1 − 0.7089) ÷ 0.00575 is about 50.62, and 450 × 50.62 gives a maximum of $22,780.14. You would pay $27,000.00 in total over the five years, so roughly $4,220 of that is interest.

Try this example →

Common mistakes

  • Expecting a down payment to be added. There is no such field, so a $5,000 down payment must be added to the result by hand.
  • Treating the maximum as the sticker price when sales tax, registration and dealer fees also have to be financed or paid.
  • Entering the rate as 0.069 instead of 6.9, or leaving it blank: a blank rate is treated as 0% interest and shows a much higher affordable price.
  • Entering years instead of months for the term. Five years is 60.
  • Stretching the term to push the affordable price up. The same payment buys more car over 84 months, but the total paid line grows with it.

Sources

About this calculator

This calculator works backward from a loan-payment formula rather than forward from a price. Given a monthly payment budget, an interest rate, and a loan term, it solves the standard amortization equation for the maximum loan principal that produces exactly that monthly payment. It has no down payment field, so if you plan to put money down, add that amount to the result to arrive at the maximum car price you can actually shop for.

Financial advisors recommend this approach specifically because car dealerships often steer negotiations toward “what monthly payment can you afford?” — a framing that makes it easy to stretch the loan term or interest rate to hit a number while the total price and total interest paid quietly balloon. Working out your maximum affordable price before walking into a dealership, based on your own budget and terms rather than the salesperson’s, keeps the negotiation anchored to the number that actually matters.

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