Most car payment calculators start with the total loan amount you want and other inputs to see what your monthly payment would be. You can try different loan terms and adjust the inputs to further customize your loan amount. NerdWallet recommends maximum loan terms of 36 months for buying a used car and 60 months for new cars. Also, a longer loan term increases your risk of becoming upside-down on the loan, meaning you owe more than the car is worth.
This will depend on several other factors, including:. Your credit score, which will in part determine your annual percentage rate, or APR, on the loan.
Your loan term: how many months you have to pay off the loan. Whether you buy new or used. New car loans tend to have lower APRs. With a monthly payment, an estimated APR and loan term, the car affordability calculator works backward to determine the total loan amount you can afford. Use our auto loan calculator to see how your down payment or trade-in credit affects your monthly payment and loan amount. Additionally, there will be sales tax and fees, so think about more than just the price on the window sticker.
Once you estimate the car loan amount you can afford, and assuming no trade-in credit or down payment, you can begin to get a realistic idea of the purchase price you should consider.
Many automotive sites, such as Kelley Blue Book, Edmunds and AutoTrader, have car finder search tools to show you different models listed by price. But remember to set the bar low.
When searching for cars, set your maximum price below the total loan amount you think you can afford. Sales tax and fees can easily add up to an extra few thousand dollars. Car type New Used.
Car loans. APR range. Rating and review. How to use the car affordability calculator. How to determine how much car you can afford.
Calculate the car payment you can afford. Back to top. Calculate the car loan amount you can afford. Consider expenses like maintenance and repair, fuel and car insurance as you plan your monthly budget. Keep in mind that the type of vehicle you purchase can affect your monthly automotive expenses. Generally speaking, the smallest vehicles can have the lowest operating costs, while the largest ones can have the highest cost of ownership.
According to information gathered by AAA, the vehicles with the lowest ownership costs are small sedans, hybrids, small SUVs and electric vehicles, in that order. Trucks have the highest ownership costs, followed by large sedans and midsize SUVs. The final step of creating your budget involves subtracting all current and projected expenses from your net income.
If you like having a certain amount of extra cash on hand for things like vacations or retirement savings, keep this in mind when deciding how much to spend on your new car.
Establishing an auto budget is an important first step in the car-buying process. Check out our guides to buying a new car or used car for tips on finding a car and financing that fits your needs. Q: Car prices both new and used have been trending up and loan terms are getting longer.
How are these trends affecting consumers? However, they may be mitigated by lower interest rates. Longer loan terms can be beneficial, in theory, with lower interest rates as consumers are extending rates that are low cost.
But, in practice, it is often the period of time when consumers own cars and have finished financing where they are most likely to accumulate wealth. Longer terms reduce monthly payments and may give consumers the false sense of having more wealth than they actually do.
One must balance both factors when deciding on a car loan. Image: Couple in the open back of car looking at each other. Advertiser Disclosure We think it's important for you to understand how we make money. Show Hide. About the author: Warren Clarke is a writer whose work has been published by Edmunds.
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