Car Loan Calculator: How Much Can You Afford?
There’s a lot to consider before you choose your first or next car. If you’re wondering, "How much can I afford for a car?" you’re in the right place. Mission Federal Credit Union’s Car Loan Calculator can help you figure out what size loan you can afford, how much you should save before buying and what your new car payment could be each month.
What to consider before deciding how much car you can afford
Before you buy, know how much you can afford to spend so your monthly payment fits in your budget. How much car can you afford? That depends on a number of different factors. Consider keeping an expense journal for a month to get an idea of how much you spend. Housing, food, bills, insurance, gas money and more should all be expenses to consider and calculate.
How large should your car payment be?
Start by estimating what kind of payment will fit in your budget. Experts recommend your car payment, plus expenses, usually comes to 20 percent or less of your total take-home pay per month. But, your car payment shouldn’t take up the full 20 percent. You’ll need to plan for gas money, registration fees, maintenance, repairs and insurance costs.
Tips to make your car loan more affordable
The size of your down payment makes a big difference in your monthly payment and the amount of your Auto Loan. Experts suggest you put 20 percent down on the total cost of the car. If you can’t manage 20 percent, save as much as possible so your payment is manageable and you get the best terms available.
Also consider the length of your car loan and the interest rate offered on each available term. Car loan terms are usually between 24 months and 84 months. While a longer term means lower monthly payments, it also means paying a higher interest rate and paying interest for much longer. So, although your monthly payment will be lower, you’ll end up paying more for your car over the life of the loan.
Don’t be left wondering, "Can I afford this car?" after it’s yours. Mission Fed’s Car Loan Calculator and Auto Loan Guide can help you stay informed and buy a car that fits your life and budget!
Interactive calculators are made available as self-help tools, and we cannot and do not guarantee their accuracy or applicability to your circumstances. All examples are hypothetical and are for illustrative purposes only. Calculators are not intended to provide investment advice, and we encourage you to seek personalized advice from qualified professionals regarding all your personal financial issues.