The Car Affordability Calculator turns a monthly payment you are comfortable with into the car price it actually supports, once your deposit, trade-in, loan rate and term are taken into account.
How it works
The tool runs the standard loan formula in reverse. Given a monthly payment
P, a monthly rate i (APR ÷ 12) and a term of n months, the largest loan
that payment supports is:
maximum loan = P × (1 − (1 + i)⁻ⁿ) ÷ i
Your total purchasing power is that loan plus your deposit and trade-in:
car price = maximum loan + deposit + trade-in
If you enter a sales-tax rate, the maximum car price is divided by (1 + tax) so
that the price and its tax still fit inside your financing.
What changes the answer most
- Term. Stretching from 48 to 72 months raises the loan a given payment supports, but adds interest and keeps you in negative equity longer.
- APR. A lower rate means more of each payment reduces principal, supporting a higher price.
- Deposit and trade-in. These add to the price directly, pound for pound or dollar for dollar.
Remember this is the purchase budget only — insurance, fuel, tax and maintenance are extra and worth budgeting before you commit.