Carl Loan Affordability Calculator

How much can you afford to spend when buying a car? Find out with our easy-to-use car loan affordability calculator and see how much you can qualify for.

Applying for a car loan is easy nowadays as most dealerships offer in-house financing, but can you afford to buy a $130,000 truck or an older model used car under $10,000? Our car loan calculator will tell you how much you can afford to spend.

How to Use the Car Loan Affordability Calculator

Using the car loan affordability calculator is easy. Just follow these steps to figure out how much you can afford to spend on a car or truck:

1. Start by putting in your monthly income. This is the amount of money you make after taxes, not what your paycheck says before deductions. You need this to figure out how much of your income can go toward a car loan.
2. Next, type in your monthly expenses. This includes everything like rent, groceries, bills, insurance, or anything else you spend money on every month. Be honest here because it will calculate how much money you have left for a car loan. If your expenses are higher than your income, you might need to rethink things because you won’t have anything left to pay for a car.
3. Add how much you can afford to pay upfront as a down payment. The more money you can put down, the better because it lowers your loan and how much interest you’ll end up paying. If you can put down 20% or more, that’s ideal. Even a small down payment helps, though, so don’t skip this part.
4. Pick how long you want to pay off the loan. Loan terms can go from 3 to 6 years. A shorter loan term means higher monthly payments but less total interest. A longer loan term means smaller payments but more interest over time. You need to decide what works best for you.
5. Put in the interest rate. If you’re not sure what rate you’ll get, use something like 5.5% as an average. This number depends on your credit score and where you’re getting the loan from. Keep in mind, dealerships usually offer higher rates because they want to make money. Banks and credit unions might give you better rates, so don’t just take the dealership’s offer without checking around.
6. Click the calculate button to see the results. The calculator will do all the work for you and show how much you can afford each month, how big of a loan you qualify for, and how much you can spend in total, including your down payment.
7. Look at the results. It will give you:
   • How much you can spend each month on a car loan
   • The biggest loan you can take based on your income and expenses
   • Your total budget, including your down payment
   • What kinds of cars you can afford, whether it’s a cheap used car under $10,000, a basic new car like a Honda Civic, or a high-end truck like a GMC Denali
8. Use this info to make a smart decision. If you’re shopping for a car, you’ll know what’s realistic and what’s not. If the results don’t give you the car you need, you might have to adjust your budget, save more for a down payment, or look for a longer loan term. Whatever you do, don’t let dealerships talk you into spending more than you can afford. They’ll try, but now you’ll know what works for you.

Why Use the Car Loan Affordability Calculator

Buying your first car can be challenging as trucks, vans, SUVs, and cars have increased in prices every year since the beginning of car manufacturing. Getting a car loan is the only way to go for most people, as they can’t pay outright for a new or used car, especially at an average wage. Most of us spend our money buying food, and spending money on a new car doesn’t even cross our minds sometimes. But we need to get to work, and sometimes the bus or a bike is not ideal because it’s too far to go to work, and it’s inconvenient.

Most dealerships offer in-house financing and will offer you what they claim to be the best interest rate on a car loan. Take my advice and don’t believe them. They will never have the best interest rates. They are out to make money off people like you and me. Find out how much money you can put down as a deposit or down payment when buying a car. It is recommended to put down as much money as possible to avoid interest rate charges. If you can pay off the car in full, by chance, you should do that.

Buying a used car can be more affordable than buying a brand-new vehicle. You should only buy a brand-new vehicle if you are financially secure and can afford the depreciation loss that a new vehicle gives as soon as you drive it off the lot. Experts say vehicles lose their value by 30% after you buy them and drive them off the lot. However, it can be difficult finding a used car as everyone that sells a used car claims that it’s in perfect condition. To get the best money value for their vehicle, they will sometimes lie, and you will find yourself at the garage more often than not. When buying a new vehicle, you can know for sure that you are the only person who drove that vehicle, and you know what’s wrong with it, if anything.

Your wage and job security will determine how much you can afford or how big of a purchase you can make at the car dealership. You can check that on our car loan affordability calculator. Your lifestyle will also depend on how much you can afford to spend when buying a car, SUV, truck, or even something off Facebook Marketplace.

Car prices can vary. Brand-new vehicles usually start at a minimum of $20,000 for a basic Honda Civic and can go all the way up to $130,000 for a GMC Denali Ultimate or a Dodge 1-ton truck. It’s only been five years, and these expensive trucks were only around $70,000. Should you buy a truck or a small car that’s cheap on gas? Well, that depends on what you do for work. If you need a truck to drive in bad conditions, gravel roads, and snowy conditions, you might just need to spend that $130,000. But if you’re just driving to work and back home in your town, then it’s probably best to buy a car that’s cheap on gas like the $20,000 Honda Civic.

Using the car loan affordability calculator can help you determine how much you can afford to spend based on your wage and your lifestyle. When you go to a dealership, they will use similar formulas to determine how much you can afford. Your credit score will also determine how much you can afford to spend when buying a car. Most dealerships will take that credit and sell you a car anyway because their insurance covers it if you default on the payment.

When going to a dealership to buy a vehicle, be sure to stand your ground and don’t let them suck you in because their job is to sell you a vehicle on the spot. Make your own decisions. Do your own research before you go to the dealership and know what you can afford because they will always try and sell you more than you can afford.

Final Thoughts

Buying a car can be very rewarding, especially if it’s brand-new. There’s nothing better than a new car smell, and the feeling of driving a new vehicle is amazing. But whether you can afford it or not is up to you.