Car Affordability Calculator
Work backward from a monthly payment you can afford to the most expensive car you can buy.
Car price you can afford
26,651.88
- Loan amount
- 25,251.00
- Sales tax
- 1,599.11
- Total interest
- 4,749.00
Assumes sales tax is charged on the price minus the trade-in (most US states) and leaves out dealer fees and registration.
Show the work
Rate per period
i = annual rate ÷ 100 ÷ 12
7 ÷ 100 ÷ 12 = 0.005833333333
Loan the payment repays
PMT × (1 − (1 + i) to the power of −n) ÷ i
500.00 × (1 − (1 + 0.005833333333) to the power of −60) ÷ 0.005833333333 = 25,251.00
Car price: loan and down payment less tax, plus trade-in
(loan + down) ÷ (1 + tax ÷ 100) + trade-in
(25,250.9968 + 3,000.00) ÷ (1 + 6 ÷ 100) + 0.00 = 26,651.88
Estimates for general information only — not financial advice.
How it works
Max loan = payment × (1 − (1 + i)^−n) ÷ i; car price = (max loan + down payment) ÷ (1 + sales tax) + trade-in
Questions
- How does the car affordability calculator work?
- Max loan = payment × (1 − (1 + i)^−n) ÷ i; car price = (max loan + down payment) ÷ (1 + sales tax) + trade-in.
- What do I need to enter?
- Monthly payment you can afford, Annual interest rate, Loan term, Cash down payment, Trade-in value, Sales tax. Optional fields can be left blank.
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