Description

Before shopping for a car, it is recommended that you determine how much you can afford to spend. You will need to calculate two numbers unless you can pay cash for the entire cost of the car. This automobile affordability calculator will help you find out how much monthly car payment you can afford. Most importantly, you can find out the maximum budget for your new car purchase. The information that is vital in the calculation is your monthly net income or month net take home salary along with your borrowing cost (loan interest rate).

How to use this Automobile Affordability Calculator ?

Let’s assume that you are thinking of buy a new car. Car can come with a lot of variety (e.g., low price cars to luxury expensive car). You can spend any amount of money on your car purchase. However, it’s not always wise to budget an amount that could be beyond your means. This calculator will help you find our how much you should spend on your upcoming car purchase.

For example, you have $3,000 in your bank account to use as the down payment toward your car purchase. Your monthly net come or monthly net take - home salary is $2,500. You can borrow money at the rate of 5% and thinking of financing the car a term of 4 yea rs. Now, you want to know your car purchase budget tha is affordable to you. Let’s enter the data in the calculator

Cash Down Payment:

Enter $3,000 as your down payment.Your input should be 0 or greater.

Monthly Take-home salary(Net):

Enter $2,500 as your monthly net income or take home salary.This must be 0 or greater.

Interest Rate :

Enter an annual interest rate of 5 % as your borrowing cost. You are allowed to enter a minimum value of 0%.

Car Loan Term:

Enter 4 as your loan term. Your entered numb er has to be greater than 0.

Monthly Payment:

This number is auto - filled based on your monthly net take - home salary that you have entered. You can change this to any amount you like as long as it’s 0 or greater. However, based on the sound personal financial plan, you should not plan on spending more than 20% of your monthly net take-home salary. Once you entered all the numbers as stated above, click on “Calculate” button. The calculator will show that you are able to afford a car costing about $24,711.48.