How Much Car Can I Afford

For most people a car is one of the few "big" purchases in life; few people can pay cash and most need to borrow money in order to be able to acquire their desired purchase. Therefore before you even start thinking about buying a specific model of your chosen brand you need to make the necessary calculations and find out how much car you can afford.

If you already ask yourself the question "How much car can I afford" and wonder how to calculate the amount that corresponds to your means, follow this car financing guide.

1. Start with estimating the money you can allocate for your car payments every month. You need to be able to fit those monthly payments comfortably into your budget. Don't be tempted to go beyond your means or you may end in a pretty bad situation.
2. Take what you have assessed as a reasonable monthly car payment and multiply it by the length of the auto loan. It is not recommended to choose very long car loans since the longer the loan, the bigger the amount of interest you will have to pay.

   For example, if you can afford $300 as a monthly payment and you want a 36-month car loan, then you will get: $300 x 36 = $10,800

3. Now consider how much cash you can allocate for your down payment. Add this amount to the sum of monthly payments to get how much car you can afford before interest, fees and taxes.

   For example, if you can put down $5,000, then you will get: $10,800 + $5,000 = $15,800

4. Next, you need to compare the interest rates that are offered at the different lending institutions for your chosen car loan term.
5. Finally, you can use our car loan calculator to see exactly how much car you can afford depending on the terms of the different car loan quotes you have found.

Final piece of advice: if you arrange your car financing before you go to the dealership you will be in a much better position to negotiate and get a better deal.

The information on this site and the car loan calculators provided are intended only to assist you with your car loans decisions without providing any personal investment advice. Since we do not consider your personal financial situation, we cannot and do not guarantee that the information provided here will be applicable or accurate to you. We advise you to seek personalized professional advice regarding your personal situation.

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