How to use this calculator
Enter the numbers you know. The result updates as you type.
- Monthly car payment budget: the most you want to pay the lender each month.
- Down payment: cash you’ll put down.
- Trade-in value and amount owed: what the dealer will give you for your current car, and what you still owe on it. The difference is your trade-in equity.
- Interest rate (APR): the rate you’ve been quoted or expect, based on your credit.
- Loan term: how many months you’ll pay. Longer terms lower the payment but cost more interest.
- Sales tax rate: your state rate plus any local rate.
- Fees: dealer, title and registration fees. The calculator assumes you’ll add them to the loan.
- Sales tax after trade-in: tick this if your state taxes the price after subtracting the trade-in value.
Example: $500 a month over 60 months
Say you can pay $500 a month for 60 months at 7% APR. You have $3,000 for a down payment and a trade-in worth $5,000 with $2,000 still owed. Sales tax is 6%, charged after the trade-in, and fees are $800.
| Result | |
|---|---|
| Loan amount | $25,251.00 |
| Car price you can afford | $29,010 |
| Sales tax | $1,440.62 |
| Total interest | $4,749.00 |
The $500 payment supports a $25,251 loan. Add your $3,000 down payment and $3,000 of trade-in equity, take off the $800 in fees, and you have enough to cover a car priced up to about $29,010 plus its sales tax.
Now see what happens if you change the loan instead of the car:
- 72 months instead of 60: the price you can afford rises to $32,856, but interest climbs to $6,672.78.
- 9% APR instead of 7%: the price you can afford falls to $27,912, because more of each payment goes to interest.
A two-point difference in your rate costs about $1,100 of car. It’s worth getting preapproved and comparing lenders before you visit a dealer.
How it’s calculated
First, the calculator works out the largest loan your payment can repay:
Loan = budget × (1 − (1 + r)^−n) ÷ r
Here, r is the monthly rate (APR ÷ 12 ÷ 100) and n is the number of monthly payments. At 0% APR, the loan is simply budget × n.
Then it adds the money you bring and removes the fees:
Cash available = loan + down payment + (trade-in value − amount owed) − fees
Finally, it solves for the price, allowing for sales tax:
- If tax is charged after the trade-in: price = (cash available + tax rate × trade-in value) ÷ (1 + tax rate)
- If tax is charged on the full price: price = cash available ÷ (1 + tax rate)
Total cost is everything you pay over the loan: the car price, sales tax, fees and interest. Figures are calculated at full precision and rounded for display. Your dealer may round taxes and fees slightly differently.
Tips for buying within your budget
- Get preapproved first. A rate from your bank or credit union gives you a figure to beat and keeps the conversation on price, not monthly payment.
- Negotiate the out-the-door price. Dealers can hit any monthly payment by stretching the term. Agree the total price, then arrange the loan.
- Keep the term as short as you can afford. The extra interest on longer loans adds up quickly, as the example shows.
- Check your trade-in value before you go. Get quotes from more than one buyer so you know what a fair offer looks like.
- Budget for running costs. Insurance, fuel and maintenance come on top of the loan payment. Leave room for them when you set your budget.
Frequently asked questions
How much car can I afford?
Start from the monthly payment that fits your budget, not the car price. Enter that payment with your loan rate and term, and the calculator works backwards to the highest price it covers after your down payment, trade-in, sales tax and fees.
Should I take a longer loan to afford a more expensive car?
A longer term lets the same payment cover a bigger loan, but you pay much more interest. In our example, stretching from 60 to 72 months raises the price you can afford by about $3,846 but adds $1,924 in interest, and you'll owe money on the car for longer.
Does a trade-in reduce sales tax?
In some states, sales tax is charged on the price after subtracting your trade-in value; in others, it's charged on the full price. Tick or untick the trade-in tax box to match your state, and check with your state's tax or motor vehicle agency if you're unsure.
What fees should I include?
Include the dealer documentation fee, title and registration fees and any other charges you'll roll into the loan. Ask the dealer for an out-the-door price so nothing is missed.
What if I owe more on my trade-in than it's worth?
That's negative equity, and it reduces the price you can afford because the leftover balance has to be paid off as part of the new deal. Enter what you owe and the calculator subtracts the shortfall.
Does the monthly budget include insurance and fuel?
No. The budget here is the loan payment only. Set it after allowing for insurance, fuel, maintenance and registration, which you'll pay on top.