Car Affordability Calculator

Formula audit

The calculator first reserves the recurring costs you entered:

Loan payment capacity = all-in monthly cap − monthly non-loan costs

For a fixed-rate installment loan, that payment supports this maximum financed principal:

Principal = payment × [1 − (1 + monthly rate)^−months] ÷ monthly rate

At 0% APR, principal is simply payment × months. The calculator then assumes the full sticker price is taxed, financed fees are added after tax, and the combined upfront credit is applied after tax:

Principal = sticker price × (1 + tax rate) + financed fees − upfront credit

Therefore:

Maximum sticker price = (principal + upfront credit − financed fees) ÷ (1 + tax rate)

Worked example

Use a $900 all-in cap, reserve $300 for monthly ownership costs, enter $5,000 of combined upfront credit, $1,000 of financed fees, 6.5% APR for 60 months, and 7.5% sales tax.

The identity is visible: taxed price + financed fees − upfront credit = financed principal.

Scope and important limits

• This is a budget planning estimate, not lender approval and not a recommendation that a price is affordable for you.
• It does not use income, debt-to-income ratios, credit scores, live rates, depreciation, resale value, leases, balloon payments or negative trade equity.
• Enter non-loan costs yourself. Insurance, fuel, charging, maintenance, registration and parking vary too much for a trustworthy universal default.
• Sales-tax bases and trade-in credits differ by jurisdiction. This version taxes the full sticker price and applies the combined upfront credit afterward. A locality that taxes only the price after a trade-in credit will produce a different result.
• Upfront credit means cash down plus positive net trade-in equity. Do not enter negative equity as a negative credit.