While auto dealers do their best to 'put you in a car', it's no secret that credit has gotten tighter. This new calculator from Autobytel can help you determine how much car you can afford. All you need to enter is the down payment you can put up, the interest rate, and the term (length in months) of the auto loan you can qualify for.
But before you can use this calculator to help determine how much car you can afford,
you’ll need to know your budget, including both your income and expenses.
If you earn $50,000 per year and pay 20% of that in taxes, your actual annual take home pay is $40,000 per year, or $3330 per month. Say your monthly housing expenses are $800, food expenses $500, health insurance and other medical about $250, credit cards and student loans $450, travel and entertainment $400, and you’ve allotted $300 a month to savings and 'rainy day' funds. That’s a total of $2700, leaving $630 a month (or $7560 annually) towards a car.
If your car insurance payments are $1800 per year, and maintenance and gas is about $1800 (12,000 miles @30 miles per gallon equals 400 gallons@$4, or $1600), that leaves about $330 a month towards car payments. Let’s go instead for a more conservative $300 per month.
Using the calculator, put down the down payment you can afford, including cash available, your trade-in, or the rebate from the manufacturer. Let's say your trade-in is worth $3500, and you can put down an extra $1000 in cash. Your desired monthly payment is $300, and your credit history will allow you to get a 7% interest rate for 48 months.
Based on these results, the calculator shows you could purchase an auto valued at $16,694. (Remember to included sales tax and license fees in your calculations.) This includes the down payment of $4,500 and loan amount of $12,194.
However, if you could quality for a 4% loan for 60 months, you could purchase an auto valued at $20,527, including a down payment of $4,500 and a loan amount of $16,027.
If you know your budget and use Autobytel to help you shop for both financing and your new automobile, you might be surprised at how much car can you can afford.